Question

Jeanne loans her roommates $500 at 7% simple interest per year how much interest will Jeanne earn in eight months?

Answer 1

Simple interest is calculated using the formula:

$\begin{gathered} I\text{ = }\frac{P\text{ X R X T}}{100} \\ \end{gathered}$

I is the simple interest

P is principal

R is the rate

T is time in years

From the question, Principal is $500, the rate is 7%

and the time 8 months which has to be converted to years

8 months = 8/12 years = 2/3 years

$\begin{gathered} I\text{ =}\frac{500\text{ X 7 X }\frac{2}{3}}{100} \\ \\ I\text{ =}\frac{500\text{ X 7 X 2}}{100\text{ X 3}} \\ \\ I\text{ = }\frac{7000}{300} \\ \\ I\text{ = \ 23.33} \end{gathered}$