Bill Moore is buying a used Winnebago. His April monthly interest at 7.50% was $37.50. What was Bill’s principal balance at the beginning of April? (Use 360 days a year. Do not round intermediate calculations.)
Monthly interest at 7.5 % ?
Rather absurd, I would say.
Are you sure the rate wasn't compounded monthly?
To find Bill's principal balance at the beginning of April, we need to use the formula for calculating interest:
Interest = Principal x Rate x Time
Where:
Interest = $37.50 (given)
Rate = 7.50% or 0.075 (convert to decimal)
Time = 1/12 (since the interest is for one month, and there are 12 months in a year)
Now let's rearrange the formula and solve for Principal:
Principal = Interest / (Rate x Time)
Substituting the given values:
Principal = $37.50 / (0.075 x 1/12)
Since the denominator is a multiplication, let's first simplify Rate x Time:
Rate x Time = 0.075 x 1/12 = 0.075/12 = 0.00625
Now we can calculate the Principal:
Principal = $37.50 / 0.00625
Dividing:
Principal ≈ $6,000
Therefore, Bill's principal balance at the beginning of April was approximately $6,000.