Question

Use the formula for simple interest, I = Prt, to find the indicated quantity. Assume a 360 day year.1 = $36, P = $1200; t = 180 days; r=?

Answer 1

EXPLANATION:

Given;

We are given the following information for calculating simple interest;

$I=36,P=1200,t=180\text{ }days$

Required;

We are required to calculate the rate of interest, r.

Step-by-step solution;

The formula for the simple interest calculation is given as;

$I=PRT$

We shall make the rate r, the subject of the formula;

$\begin{gathered} Divide\text{ }both\text{ }sides\text{ }by\text{ }PT: \\ \frac{I}{PT}=\frac{PRT}{PT} \\ \\ \frac{I}{PT}=R \end{gathered}$

Note also that the time is given in years. However, what we have here is 180 days out of a 360-day year. That means the time t, would now be;

$\begin{gathered} t=\frac{180}{360} \\ \\ t=\frac{1}{2}=0.5 \end{gathered}$

The rate can now be calculated as follows;

$\begin{gathered} R=\frac{36}{1200\times0.5} \\ \\ R=\frac{36}{600} \\ \\ R=0.06 \end{gathered}$

The rate as we can see is 0.06. As a percentage, this now becomes;

$\begin{gathered} Percentage\text{ }rate=0.06\times100 \\ \\ Percentage\text{ }rate=6\% \end{gathered}$

ANSWER:

$r=6$