If you purchase an item for $1,294 at an interest rate of 9.8%, and you finance it for 1 year, how much is the amount of add-on interest? (Round your answer to the nearest dollar.)
$ 1
Int. = Po*r*t = 1294*0.098*1 = $127.
To find the amount of add-on interest, we need to first calculate the interest amount using the formula:
Interest amount = Principal amount * Interest rate
Given:
Principal amount = $1,294
Interest rate = 9.8%
Plugging in the values, we have:
Interest amount = $1,294 * 9.8% = $1,294 * 0.098 = $126.51
Since we need to round the answer to the nearest dollar, the amount of add-on interest is approximately $127.