{"id":235,"date":"2020-04-21T16:53:12","date_gmt":"2020-04-21T20:53:12","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/?post_type=chapter&p=235"},"modified":"2021-06-28T14:10:31","modified_gmt":"2021-06-28T18:10:31","slug":"calculating-the-amount-of-interest","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/chapter\/calculating-the-amount-of-interest\/","title":{"raw":"3.3 Calculating the Amount of Interest","rendered":"3.3 Calculating the Amount of Interest"},"content":{"raw":"

We will apply the formula:<\/p>\r\n

[latex]I = Prt[\/latex]<\/p>\r\n\r\n

Example 3.3.1<\/h2>\r\n
    \r\n \t
  1. How much interest must be paid on a $5,000 loan at 7.5% (per annum or pa) simple for 32 months?<\/li>\r\n<\/ol>\r\nNote:\u00a0\u00a0 It is recommended that you always <\/strong>state the data before solving the problem.\r\n

    [latex]P = $5,000[\/latex]<\/p>\r\n

    [latex]r = 7.5\\% \\text{ or } 0.075[\/latex]<\/p>\r\n

    [latex]t=\\frac{32}{12}\\; years[\/latex]<\/p>\r\nTherefore:\r\n

    [latex]I=$5,000\\times 0.075 \\times \\frac{32}{12}=$1,000[\/latex]<\/p>\r\n\r\n

      \r\n \t
    1. 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?<\/li>\r\n<\/ol>\r\nUsing Table 3-1:\r\n

      [latex]t=\\frac{227-43}{365}=\\frac{184}{365}\\; year[\/latex]<\/p>\r\nOr using the BAII PLUS:\r\n\r\n \r\n\r\nDT1 = 2.1223 [ENTER]\r\n\r\n\u2193DT2 = 8.1523 [ENTER]\r\n\r\n\u2193[CPT] DBD = 184\r\n\r\n \r\n\r\nTherefore,\r\n

      [latex]I=$6,500\\times 0.085 \\times \\frac{184}{365}=$278.52[\/latex]<\/p>\r\n \r\n

      Your Own Notes<\/h2>\r\n
        \r\n \t
      • Are there any notes you want to take from this section? Is there anything you'd like to copy and paste below?<\/li>\r\n \t
      • These notes are for you only (they will not be stored anywhere)<\/li>\r\n \t
      • Make sure to download them at the end to use as a reference<\/li>\r\n<\/ul>\r\n[h5p id=\"1\"]","rendered":"

        We will apply the formula:<\/p>\n

        [latex]I = Prt[\/latex]<\/p>\n

        Example 3.3.1<\/h2>\n
          \n
        1. How much interest must be paid on a $5,000 loan at 7.5% (per annum or pa) simple for 32 months?<\/li>\n<\/ol>\n

          Note:\u00a0\u00a0 It is recommended that you always <\/strong>state the data before solving the problem.<\/p>\n

          [latex]P = $5,000[\/latex]<\/p>\n

          [latex]r = 7.5\\% \\text{ or } 0.075[\/latex]<\/p>\n

          [latex]t=\\frac{32}{12}\\; years[\/latex]<\/p>\n

          Therefore:<\/p>\n

          [latex]I=$5,000\\times 0.075 \\times \\frac{32}{12}=$1,000[\/latex]<\/p>\n

            \n
          1. 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?<\/li>\n<\/ol>\n

            Using Table 3-1:<\/p>\n

            [latex]t=\\frac{227-43}{365}=\\frac{184}{365}\\; year[\/latex]<\/p>\n

            Or using the BAII PLUS:<\/p>\n

             <\/p>\n

            DT1 = 2.1223 [ENTER]<\/p>\n

            \u2193DT2 = 8.1523 [ENTER]<\/p>\n

            \u2193[CPT] DBD = 184<\/p>\n

             <\/p>\n

            Therefore,<\/p>\n

            [latex]I=$6,500\\times 0.085 \\times \\frac{184}{365}=$278.52[\/latex]<\/p>\n

             <\/p>\n

            Your Own Notes<\/h2>\n
              \n
            • Are there any notes you want to take from this section? Is there anything you’d like to copy and paste below?<\/li>\n
            • These notes are for you only (they will not be stored anywhere)<\/li>\n
            • Make sure to download them at the end to use as a reference<\/li>\n<\/ul>\n
              \n