3.3 Calculating the Amount of Interest
We will apply the formula:
[latex]I = Prt[/latex]
Example 3.3.1
- How much interest must be paid on a $5,000 loan at 7.5% (per annum or pa) simple for 32 months?
Note: It is recommended that you always state the data before solving the problem.
[latex]P = $5,000[/latex]
[latex]r = 7.5\% \text{ or } 0.075[/latex]
[latex]t=\frac{32}{12}\; years[/latex]
Therefore:
[latex]I=$5,000\times 0.075 \times \frac{32}{12}=$1,000[/latex]
- How much interest must be paid on a $6,500 loan at 8.5% (per annum or pa) simple if the loan was taken out on February 12, 2023 and repaid on August 15, 2023?
Using Table 3-1:
[latex]t=\frac{227-43}{365}=\frac{184}{365}\; year[/latex]
Or using the BAII PLUS:
DT1 = 2.1223 [ENTER]
↓DT2 = 8.1523 [ENTER]
↓[CPT] DBD = 184
Therefore,
[latex]I=$6,500\times 0.085 \times \frac{184}{365}=$278.52[/latex]
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