Solve the problem. Assume that simple interest is being calculated in each case. Round your answer to the nearest cent.
-John forgot to pay his $413.00 income tax on time. The IRS charged a penalty of 3% for the 35 days The money was late. Find the penalty that was paid. (Use a 365 day year.)
A) $414.19
B) $0.14
C) $1.15
D) $1.19

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Quizplus · Accepted Answer

The penalty is calculated using the formula for simple interest: $I = P \times r \times t$, where $I$ is the interest (penalty in this case), $P$ is the principal amount ($413.00), $r$ is the annual interest rate (3% or 0.03 when expressed as a decimal), and $t$ is the time the money was borrowed or in this case, the time the payment was late, expressed in years. For 35 days out of a 365-day year, $t = \frac{35}{365}$. Plugging the values into the formula gives: $I = 413 \times 0.03 \times \frac{35}{365} = 1.18904109589$, which rounds to $1.19.

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