example 5: how much simple interest does $2,000 earn in 7 months at an interest rate of 2%? round to the…

example 5: how much simple interest does $2,000 earn in 7 months at an interest rate of 2%? round to the nearest cent.

example 5: how much simple interest does $2,000 earn in 7 months at an interest rate of 2%? round to the nearest cent.

Answer

Explanation:

Step1: Convert time to years

The time $t$ in years. Since there are 12 months in a year, for 7 months, $t=\frac{7}{12}$ years. The principal $P = 2000$ and the annual - interest rate $r=0.02$ (since $2%=0.02$).

Step2: Apply simple - interest formula

The simple - interest formula is $I = Prt$. Substitute $P = 2000$, $r = 0.02$, and $t=\frac{7}{12}$ into the formula: $I=2000\times0.02\times\frac{7}{12}$ $I = 2000\times\frac{0.02\times7}{12}$ $I=\frac{2000\times0.14}{12}=\frac{280}{12}\approx23.33$

Answer:

$23.33$