Question

Find the simple interest owed for the following loan. The interest is $ (Do not round until the final answer. Then round to the nearest cer Principal Rate Time in Years 1 $2975 6.5% 3/12

Answer 1

The simple interest formula is given by

`I=p\cdot r\cdot t`

where I is the interest, p is the principal, r is the interest rate and t the time in years.

In our case,

`\begin{gathered} P=2975 \\ r=0.065 \\ t=3(1)/(2) \end{gathered}`

However, in order to use the above formula, we must convert the time into a simple fraction form, that is

`3(1)/(2)=(2\cdot3+1)/(2)=(7)/(2)`

Then, by subsituting our values into the simple interest formula, we get

`I=(2975)(0.065)((7)/(2))`

which gives

`\begin{gathered} I=(13563.625)/(2) \\ I=676.8125 \end{gathered}`

Then,by rounding to the nearest cent, the interest is $676.81