What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places. $5141.75 $514.17 $496.49 $514.18
What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places. $5141.75 $514.17 $496.49 $514.18
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### Simple Interest Calculation
#### Quiz Question:
**Question:**
What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places.
**Options:**
- $5141.75
- $514.17
- $496.49
- $514.18
**Other Options:**
- I don't know
#### Explanation:
To determine the amount of interest owed on a loan, the simple interest formula is applied:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]
In this question:
- The Principal (P) is $7,850.
- The Rate (R) is 6.55% per annum, which can be written as 0.0655.
- The Time (T) is 1 year.
Plug these values into the formula:
\[ \text{Interest} = 7850 \times 0.0655 \times 1 \]
Calculate the interest:
\[ \text{Interest} = 514.175 \]
Rounded to two decimal places, the interest is $514.18.
So, the correct option should be:
- $514.18
#### Note:
This multiple-choice question helps you practice calculating the simple interest for a given principal, rate, and time period.
**Attempts available:** 2 attempts](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F71910611-ff80-4468-bb7d-35d8955660ea%2Fc5df9adf-80ba-42a0-a3e1-a6bf9f2095d9%2Ff7uylcf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Simple Interest Calculation
#### Quiz Question:
**Question:**
What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places.
**Options:**
- $5141.75
- $514.17
- $496.49
- $514.18
**Other Options:**
- I don't know
#### Explanation:
To determine the amount of interest owed on a loan, the simple interest formula is applied:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]
In this question:
- The Principal (P) is $7,850.
- The Rate (R) is 6.55% per annum, which can be written as 0.0655.
- The Time (T) is 1 year.
Plug these values into the formula:
\[ \text{Interest} = 7850 \times 0.0655 \times 1 \]
Calculate the interest:
\[ \text{Interest} = 514.175 \]
Rounded to two decimal places, the interest is $514.18.
So, the correct option should be:
- $514.18
#### Note:
This multiple-choice question helps you practice calculating the simple interest for a given principal, rate, and time period.
**Attempts available:** 2 attempts
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