This Math quiz is called 'Business Math 03 - Calculating Interest Per Day (Practice 1)' and it has been written by teachers to help you if you are studying the subject at middle school. Playing educational quizzes is a fabulous way to learn if you are in the 6th, 7th or 8th grade - aged 11 to 14.
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You have learned how to calculate simple interest per year. It is pretty straightforward in that, using the formula, it is the principal times the interest rate times the number of years (I = PRT). But what happens if the principal amount is paid off in days rather than years? Let’s look at an example problem.
You want to borrow some money for a short period of time, say $6,300.00 at 8% for 310 days. We still use the formula I = PRT but now our worked problem should look as follows:
Working the problem:
$6,300.00 at 8% for 310 days
(as there are 365 days in a year but you are only using the money for 310 days, you show this in a fraction, i.e., 310 days/365 days)
I = PRT
6,300 x 0.08 x 310/365
6,300 x 0.08 = 504
$504.00 per year (but we don’t need the whole year so we must now divide as follows)
504 ÷ 365 (days) = 1.3808219 (this means the interest per day [also referred to as per diem] is $1.3808219)
$1.3808219 x 310 (days) = $428.05
I = $428.05
There are a few more steps to follow in calculating the per diem that now includes division but if you take each step slowly, you should have no problem finding the amount of interest that will be owed or paid at the end of the time period mentioned in each of the following ten problems.