Exercise 20 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 $2700, the interest rate is 8.2 %, and the time is 3 months. We want to find the simple interest paid to the nearest cent. Keep in mind that 3 months represent 312 of a year and that 8.2 % is written in decimal form as 0.082. p= 2700, r= 0.082, t= 3/12 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= 2700( 0.082)( 3/12)

Multiply

Multiply

I=221.4(3/12)

ReduceFrac

a/b=.a /3./.b /3.

I=221.4(3÷ 3/12÷ 3)

CalcQuot

Calculate quotient

I=221.4(1/4)

MoveLeftFacToNumOne

a* 1/b= a/b

I=221.4/4

CalcQuot

Calculate quotient

I=55.35

The simple interest paid is $ 55.35.