Exercise 5 Page 171

If we borrow money from a bank, we pay the bank interest for the use of their money. Similarly, if we have an unpaid balance on a credit card, we also pay interest to the credit card company. To calculate the interest I, we use the simple interest formula. I= p r t, where... I& =Interest p& = Principal r& = Annual interest rate t& = Time (in years)We are given that the loan amount is $4500, the interest rate is 9 %, and the time is 3.5 years. We want to find the simple interest paid to the nearest cent. Keep in mind that 9 % is written in decimal form as 0.09. p= 4500, r= 0.09, t= 3.5 To calculate the interest, let's substitute these values into the simple interest formula and evaluate the right-hand side.

I=prt

SubstituteValues

Substitute values

I= 4500( 0.09)( 3.5)

Multiply

Multiply

I=1417.5

The simple interest paid is $ 1417.50.