Simple interest

Question

I need help with this question for simple interest. The principal given is 50000 from 11 November 2016 to 10 May 2017 (181days) with an annual interest rate of 4.5%. I know that the amount of interest is 1114.90 but I cannot seem to get the calculation right. Please help. Thank you.

Answer 1

P(t) = P₀(1.045)^t

 

t = number of years at 4.5% interest

 

t = (181 days) / (365 days/year) ≅ 0.4959 years

 

P(0.4959) = 50,000 (1.045)^0.4959 ≅ 51,103

 

Interest = 51,103 - 50,000 = 1103, which is close to 1114.90, probably due to different roundoff of t.