What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places. $5141.75 $514.17 $496.49 $514.18

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Can you solve this
### Simple Interest Calculation

#### Quiz Question:
**Question:**  
What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places.

**Options:**
- $5141.75
- $514.17
- $496.49
- $514.18

**Other Options:**
- I don't know

#### Explanation:
To determine the amount of interest owed on a loan, the simple interest formula is applied:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]

In this question:
- The Principal (P) is $7,850.
- The Rate (R) is 6.55% per annum, which can be written as 0.0655.
- The Time (T) is 1 year.

Plug these values into the formula:
\[ \text{Interest} = 7850 \times 0.0655 \times 1 \]

Calculate the interest:

\[ \text{Interest} = 514.175 \]

Rounded to two decimal places, the interest is $514.18. 

So, the correct option should be:
- $514.18

#### Note:
This multiple-choice question helps you practice calculating the simple interest for a given principal, rate, and time period.

**Attempts available:** 2 attempts
Transcribed Image Text:### Simple Interest Calculation #### Quiz Question: **Question:** What is the amount of interest owed if $7,850 is borrowed at 6.55% for 1 year? Round to two decimal places. **Options:** - $5141.75 - $514.17 - $496.49 - $514.18 **Other Options:** - I don't know #### Explanation: To determine the amount of interest owed on a loan, the simple interest formula is applied: \[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \] In this question: - The Principal (P) is $7,850. - The Rate (R) is 6.55% per annum, which can be written as 0.0655. - The Time (T) is 1 year. Plug these values into the formula: \[ \text{Interest} = 7850 \times 0.0655 \times 1 \] Calculate the interest: \[ \text{Interest} = 514.175 \] Rounded to two decimal places, the interest is $514.18. So, the correct option should be: - $514.18 #### Note: This multiple-choice question helps you practice calculating the simple interest for a given principal, rate, and time period. **Attempts available:** 2 attempts
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education