Amount of interest paid in 30 days on one year term

by visitor
(Canada)

Question

Calculate the amount of interest paid on $1000 at 10% for one year with first payment in 30 days.

Answer

STEP 1:
Our aim is to find the amount of interest for 30 days. The formula used to calculate the simple interest is:

                                              I = Prt

Here, P denotes the principal, r represents the rate of interest for one year, and t is the time in years.

STEP 2:
Since the time period is 30 days, we are required to convert the number of days into an equivalent number of years. It is a known fact that a year consists of 365 days. This means that we have to divide 30 days by 365 days to get the equivalent number of years.

STEP 3:
Now, we have to convert the rate of interest to a decimal by dividing it by 100.
STEP 4:
Finally, we will substitute all the known values in the formula for simple interest and evaluate.The amount of interest paid in 30 days is about $8.22.