Question

A restaurant borrows $15,200 from a local bank for 7 months. The local bank charges simple interest at an annual rate of 4.55% for this loan. Assume each month is 1/12 of a year. Find the interest that will be owed after 7 months.

Answer 1

The simple interest that the restaurant owes to the bank after 7 months is $403.

The principal amount the restaurant borrows from the bank = $15,200.

The rate of interest per year the bank provides = 4.55%

The time period the restaurant borrowed the money from the bank = 7 months.

We have to calculate the simple Interest the bank received from the restaurant after 7 months of borrowing $15200.

What is simple interest?

Simple interest is the amount of interest charged on a given principal amount P at a given rate of interest R for a given period of time.

The formula used to calculate simple interest is:

SI = (PXRXT) / 100...........(1)

Where P = principal amount

R = rate of interest

T = time period in years.

We have,

P = $15,200

R = 4.55%

T = 7 months.

Time is in months and we need to convert it into years.

We know that,

12 month = 1 year

So,

7 months = 7 / 12 years

So we have,

T = 7 / 12 years.

Putting P = 15200, R = 4.55 and T = 7/12 in (1)

We get,

SI = [ 15200 x 4.55 x (7/12) ] / 100

SI = (15200 x 4.55 x 7) / (12 x 100)

SI = 484120 / 1200

SI = 403.43

Rounding to the nearest whole number.

SI = $403

Thus the simple interest that the restaurant owes to the bank after 7 months is $403.

Learn more about simple interests here:

brainly.com/question/1156423

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