Question

1. andrew borrows $79,500 for 5 months on 6.30% interest rate in his saving account. calculate the simple interest?

Explanation:

Step1: Recall simple interest formula

The formula for simple interest is $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years.

Step2: Identify values

Here, $P = \$79500$, $r = 6.30\% = 0.063$ (converted to decimal), and $t = \frac{5}{12}$ years (since 5 months is 5/12 of a year).

Step3: Substitute into formula

$I = 79500 \times 0.063 \times \frac{5}{12}$

First, calculate $79500 \times 0.063$:
$79500 \times 0.063 = 79500 \times \frac{63}{1000} = \frac{79500 \times 63}{1000} = \frac{5008500}{1000} = 5008.5$

Then, multiply by $\frac{5}{12}$:
$I = 5008.5 \times \frac{5}{12} = \frac{5008.5 \times 5}{12} = \frac{25042.5}{12} = 2086.875$

Answer:

The simple interest is $\$2086.88$ (rounded to the nearest cent) or $\$2086.875$ (exact value).