I am having an issue finding the correct amount. Ive tried the simple interest formula and the compound interest formula

Question

$20,000 is loaned at a simple interest rate of 8% for 90 days. Find the total amount that must be repaid at the end of the 90-day period. (Round your answer to the nearest cent.)

the answer is supposed to be 20, 394.52.

but I havent been able to get that.



the answer i got was 20398.39

Answer 1

So, your answer is very similar. You may want to change how you are inputting the calculation into the calculator, which is a simple fix. Use the simple interest rate equation and try inputting the calculation in the following order (if you have a CASIO calculator, this should work):

step 1. (0.08 x (90/365))

step 2. add 1 to the previous answer without clearing the calculator

step 3. x 20,000

This order should allow you to obtain the correct answer!

Answer 2

Hi Karen!

You definitely want to use the Simple interest formula which is A=P(1 + rt )

However, I think I can see where you're getting stuck.

A is what we're trying to solve for, P is equal to Principal, R = Rate and T = Time.

Let's put in our numbers where we have them.

First, convert R percent to r a decimal

r = R/100 = 8%/100 = 0.08 per year.

Putting time into years for simplicity,

90 days / 365 days/year = 0.246575 years.

Solving our equation:

A = 20000(1 + (0.08 × 0.246575)) = 20394.52

A = $20,394.52

The total amount accrued, principal plus interest, from simple interest on a principal of $20,000.00 at a rate of 8% per year for 0.246575 years (90 days) is $20,394.52.