The amount of interest on $5,000 with 6% interest rate for 90 days is $75
Interest can be considered as a cost of borrowing money. The interest rate is usually measured annually.
The formula for the simple interest is given by:
I = P x i x n
Where:
I = amount of interest
i = interest rate per period
n = number of periods
P = principal
In the given problem, the period is number of days. The given annual interest rate is 6%, hence,
i = 6% / 365 = 0.06 / 365
n = number of days = 90
Plug these parameters into the formula:
I = 5,000 x 0.06/365 x 90
I ≈ 75
Hence, the amount of interest is $75
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