You are here:

Basic Math/Simple Interest

Advertisement


Question
Hello:

$0.60 represents interest on $600.00 at 6% for 6 days using a 360 day year and simple interest.  If the $0.60 is multiplied by, for example, 10, as in 10 days, the amount becomes $6.00, which represents interest on $600.00 at 6% for 60 days.

The calculation looks that the following: 10 X ($600.00 at 6% for 6 days) = 10 X $0.60 = $6.00.

Why are not the 6 days multiplied by 10 days also so that the number of days becomes 60 days?  Only the interest of $0.60 is multiplied by 10.  I would think that the calculation should be (10 days)/(10 days) X  ($600.00 at 6% for 6 days) = (10 days)/(10 days) X ($0.60)/(6 days) = $6.00/60 days.

Why is 10 X ($600.00 at 6% for 6 days) = 10 X $0.60 = $6.00 sufficient? How do the days units cancel in the calculation?

What calculation would you use?

I thank you for your reply.

Answer
Either way gives the same result, since it is all multiplied together anyhow.
1. Multiply the the interest amount for 1 day by 10 to get $0.60 x 10 = $6.00...OR...
2. Multiply the 6 days by 10 to get 60 days to get 60 * $600 *(6%/360) = $6.00
 (the 6%/360 is the daily interest rate...times $600 gives $0.10 interest/day)

See now?

Abe

Basic Math

All Answers


Answers by Expert:


Ask Experts

Volunteer


Abe Mantell

Expertise

Hello, I am a college professor of mathematics and regularly teach all levels from elementary mathematics through differential equations, and would be happy to assist anyone with such questions!

Experience

Over 15 years teaching at the college level.

Organizations belong to
NCTM, NYSMATYC, AMATYC, MAA, NYSUT, AFT.

Education/Credentials
B.S. in Mathematics from Rensselaer Polytechnic Institute
M.S. (and A.B.D.) in Applied Mathematics from SUNY @ Stony Brook

©2016 About.com. All rights reserved.