Question

The principal P is borrowed at a simple interest rate r for a period of time t. Find the simple interest owed for the use of the money. Assume there are 360 days in a year. P= $7000 r= 2.0% t= 18 months

Answer 1

To solve this problem, we need the simple interest formula:

`A=P(1+rt)`

Replacing using the given values:

`\begin{gathered} A=7000(1+0.02\ast1.5) \\ A=7210 \end{gathered}`

We need to convert 2% to decimal 0.02 and convert 18 months into years.

Now, we need to find the simple interest:

I = A - P

Replacing:

I = 7210-7000

I =