Exercise 19 Page 173

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 $ 725, the interest rate is 6.25 %, and the time is 1 year. We want to find the simple interest paid to the nearest cent. Keep in mind that 6.25 % is written in decimal form as 0.0625. p= 725, r= 0.0625, t= 1 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= 725( 0.0625)( 1)

Multiply

Multiply

I=45.3125

RoundDec

Round to 2 decimal place(s)

I≈ 45.31

The simple interest paid is about $ 45.31.