Compute the simple interest. Assume 1 month to be of a year. Round your answer to the nearest cent.
Principal Rate Time Interest
$1,025 4.5% 16 months
Do you mean that 12 months to be a year?
yes
To calculate the simple interest, you need to use the formula:
Interest = Principal × Rate × Time
Given:
Principal = $1,025
Rate = 4.5%
Time = 16 months
First, convert the rate from a percentage to a decimal by dividing it by 100:
Rate = 4.5% ÷ 100 = 0.045
Next, convert the time from months to years by dividing it by 12:
Time = 16 months ÷ 12 = 1.33 years (rounded to two decimal places)
Now you can calculate the interest using the formula:
Interest = $1,025 × 0.045 × 1.33
Plugging in the values:
Interest = $1,025 × 0.045 × 1.33 = $61.01775
Finally, round the interest to the nearest cent:
Interest = $61.01775 (rounded to the nearest cent) = $61.02
Therefore, the simple interest is $61.02.