Question

Eight hundred dollars is borrowed at an interest rate of 1.5% per month. Find the interest paid over a period of 5 months.

Answer 1

If interest is compounded

Let A(t) = account balance at end of t months.

Then A(0) = 800

A(5) = 800*1.015^5

Interest = A(5) - A(0) = 800*1.015^5 - 800 = 61.83

If interest is simple

Interest = 800*.015*5 = 60

Answer 2

the interest is 12 hundred dollars.
12 times 5= 60