   Chapter 10.I, Problem 45RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Emil Benson missed an income tax payment of $9,000. The Internal Revenue Service charges a 13 % simple interest penalty calculated by the exact interest method. If the tax was due on April 15 but was paid on August 19. what was the amount of the penalty charge? To determine To Calculate: The amount of penalty charge paid by Emil on August 19 if he missed an income tax payment of$9,000 which is due on April 15.

Explanation

Given Information:

He missed an income tax payment of \$9,000 which is due on April 15.

The penalty by internal revenue service is 13% simple interest.

Formula used:

Steps for determining the number of days of a loan,

Step 1: Find the number of days that will remain in the first month.

Step 2: Find the number of days for each succeeding whole months.

Step 3: Now, find the number of days in the loan month.

Step 4: Add all the days obtained in the above steps.

The simplest interest formula for principal amount P, Rate R and Time T is,

Interest=P×R×T

Calculation:

As the due date is on April 15 and Emil paid the premium on August 19. Therefore, the number of days for which he must pay the penalty is calculated as below,

Step 1:

The remaining days in the first month;

Days remaining in April=Days in AprilLoan date April 15=30 days15 days=15 days

Step 2:

The number of days for each succeeding whole months are,

Days in May=31Days in June=30Days in July=31  Total  days=92¯

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