Questions: Find the interest on the loan using the Banker's rule. P= 825, r=5.2 %, t=120 days The interest on the loan using the Banker's rule is

Transcript text: Find the interest on the loan using the Banker's rule. \[ P=\$ 825, r=5.2 \%, t=120 \text { days } \] The interest on the loan using the Banker's rule is $\$$ $\square$

Solution

Solution Steps

To find the interest on the loan using the Banker's rule, we use the formula for simple interest: $ I = P \times r \times t $. Here, $ P $ is the principal amount, $ r $ is the annual interest rate (expressed as a decimal), and $ t $ is the time in years. Since the time is given in days, we convert it to years by dividing by 360, as per the Banker's rule.

Step 1: Given Values

We are given the following values for the loan:

Principal amount $ P = 825 $
Annual interest rate $ r = 5.2\% = 0.052 $
Time $ t = 120 $ days

Step 2: Convert Time to Years

Using the Banker's rule, we convert the time from days to years: \[ t_{\text{years}} = \frac{120}{360} = \frac{1}{3} \text{ years} \]

Step 3: Calculate Interest

We apply the simple interest formula: \[ I = P \times r \times t_{\text{years}} \] Substituting the values: \[ I = 825 \times 0.052 \times \frac{1}{3} = 14.3 \]