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Question 890226: i need help with this question calculate the simple interest earned on an investment of 17 760 at 6.1% p.a over 306 days
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! if it's simple interest, then there is no compounding.
the formula for simple interest is p * i * n
p is the principal.
i is the interest rate per time period.
n is the number of time periods.
you need to determine the number of days per year you will use for the calculation.
some use 360 days per year.
some use 365 days per year.
some get fancy and use 365.25 days per year.
some get even fancier and figure the leap years make a correction every 100 years and do something bizarre to calculate the average number of days in a year.
you will more then likely be using either 360 or 365.
i'll use 365.
the interest for 306 days is equal to 306 * .061 / 365 * 17760 which is equal to 908.24.
the interest rate for the 306 days is equal to 908.24 / 17760 = .051
as a test, the interest rate for 365 days is equal to 365 * .061 / 365 * 17760 = 1083.36.
the interest rate for the 365 days is equal to 1083.36 / 17760 = .061.
the formula is good.
your answer is that the interest for 306 days is equal to 908.24.
you need to determine if 365 days is the number of days per year that you're supposed to be using.
If it is, you're in good shape.
if it isn't, you need to recalculate by replacing 365 with whatever they expect you to be using.
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