Question

Compute the amount of interest earned in the following simple interest problem.

A deposit of $295 at 7% for 270 days

Answer 1

The simple interest earned on a $295 deposit at a 7% interest rate for 270 days is approximately $15.29, calculated using the simple interest formula with conversions for rate and time.

Step-by-step explanation:

To compute the amount of interest earned on a simple interest investment, you can use the simple interest formula:

Interest (I) = Principal (P) × Rate (r) × Time (t)

For a deposit of $295 at a 7% interest rate for 270 days, we will need to adjust the interest rate and time so they are compatible, typically converting the rate to a decimal and time to years.

Calculate Interest:

1. Convert the annual rate to a decimal: 7% = 0.07
2. Convert days to years: 270 days ÷ 365 days/year = 0.7397 years (rounded to four decimal places)
3. Apply the simple interest formula: I = $295 × 0.07 × 0.7397
4. Perform the calculation: I = $15.29 (rounded to two decimal places)

Therefore, the simple interest earned on this investment after 270 days is approximately $15.29.