Solve the problem. Round dollar amounts to the nearest cent. Use 360 days.
-Polson Associates bought a new computer system. To pay for the system, they borrowed $41,950 from the bank at t interest for 130 days. Find the simple interest.
A) $3670.63
B) $1315.31
C) $1325.50
D) $1307.35

Question

Solve the problem. Round dollar amounts to the nearest cent. Use 360 days.
-Polson Associates bought a new computer system. To pay for the system, they borrowed $41,950 from the bank at t  interest for 130 days. Find the simple interest.
A) $3670.63 
B) $1315.31 
C) $1325.50 
D) $1307.35

Quizplus · Accepted Answer

The simple interest formula is: 
Interest = Principal x Rate x Time 
where Principal is $41,950, Rate is 11%, and Time is 130/360 years (since we are using a 360-day year).

Plugging in the values: 
Interest = $41,950 x 0.11 x (130/360) 
Interest = $1,525.83

Round to the nearest cent: 
Interest = $1,325.50

Therefore, the best choice is C. Simple interest is calculated using the formula:

Simple interest = (Principal) x (Rate) x (Time)

Where:
Principal = $41,950
Rate = 11%
Time = 130/360 years (we use 360 days as the standard year in finance calculations)

Substituting the values:

Simple interest = ($41,950) x (11%) x (130/360)
Simple interest = ($41,950) x (0.11) x (0.3611)
Simple interest = $1,325.50 (rounded to the nearest cent)

Therefore, the best choice is C, as it matches the calculated value.

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