Question

Use the following information.

Simple interest is calculated using the formula $I=prt$, where p represents the principal in dollars, $r$represents the annual interest rate, and $t$represents the time in years. Find the simple interest $I$given each of the following values.

localid="1645019360494" $p=\$31,000,r=2\frac{1}{2}\%,t=18months$

Short answer

Simple interest is $I=\$1,162.5$

Step-by-step solution

- Meaning of given formula I=prt

$prt$implies product of principle value, annual interest rate and time

So, interest rate can be evaluated by multiplying these three values

- Substitute given values

Convert 18 months into years by dividing 18 by 12

$18÷12=1.5$

Substitute $\$31,000$for $p$, $2\frac{1}{2}\%$for $r$and $1.5$for $t$into given expression

$I=31000\times 2\frac{1}{2}\%\times 1.5$

- Simplify 31000×212%×1.5

Substitute$\frac{2.5}{100}$ for $2\frac{1}{2}\%$

$\begin{array}{c}I=31000\times \frac{2.5}{100}\times 1.5\\ =\frac{116250}{100}\\ =1162.5\end{array}$

Thus, simple interest is $I=\$1,162.5$