Question

A sum of $10.000 is invested for the months of July and August at 6% simple interest: Find the amount of interest earned: Assuming exact simple interest Assuming ordinary simple interest Assuming the banker's rule

Answer 1

Simple interest can be calculated using the formula I = PRT. For a $5,000 loan at 6% over three years, the interest is $900. To find the rate for a $10,000 loan that earned $500 over five years, the rate is 1%.

Step-by-step explanation:

The calculation of simple interest for various scenarios can be demonstrated with the given sums of money and interest rates. The formula for calculating simple interest is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time period in years.

For example, to calculate the total amount of simple interest from a $5,000 loan after three years with a 6% simple interest rate, we use the formula:

I = $5,000 × 0.06 × 3 = $900

With a $10,000 loan for five years that gained $500 in simple interest, the interest rate charged can be found by rearranging the formula to solve for R:

R = I / (PT) = $500 / ($10,000 × 5) = 0.01 or 1%

Putting the formula into practice with a different example, a $100 deposit at a simple interest rate of 5% held for one year would earn:

$100 × 0.05 × 1 = $5

Answer 2

The amount of interest earned can be calculated using the formula: I = PRT. For exact simple interest, the principal amount is $10,000, the rate is 6%, and the time period is 2 months, resulting in $100 of interest.

Step-by-step explanation:

The amount of interest earned can be calculated using the formula: I = PRT

For exact simple interest, the principal amount is $10,000, the rate is 6%, and the time period is 2 months. Plugging in these values, we have: I = 10,000 * 0.06 * (2/12) = $100

For ordinary simple interest, the interest is calculated for a full year. So, the time period is 1 year. Plugging in these values, we have: I = 10,000 * 0.06 * 1 = $600

For the banker's rule, the time period is rounded up to the nearest whole year. So, the time period is 1 year. Plugging in these values, we have: I = 10,000 * 0.06 * 1 = $600