If you purchase an item for $1,263 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.)
124
Right.
To calculate the amount of add-on interest, you need to multiply the principal amount and the interest rate.
Step 1: Convert the interest rate from a percentage to a decimal by dividing it by 100.
9.8% = 9.8/100 = 0.098
Step 2: Multiply the principal amount ($1,263) by the interest rate (0.098).
$1,263 x 0.098 = $123.774
Step 3: Round the result to the nearest dollar.
The amount of add-on interest is approximately $124.
Therefore, the amount of add-on interest for a $1,263 purchase financed for 1 year at an interest rate of 9.8% is $124.