Question

an accountant for a corporation forgot to pay the firms income tax of $725,870.81 on time. the government charged a penalty of 8.7% interest for the 36 days the money was late. find the total amount (tax and penalty) that was paid. assume 365 days in a year.
the total amount paid was $
(round to the nearest cent as needed.)

Explanation:

Step1: Calculate the penalty amount

The formula for simple - interest penalty is $I = Prt$, where $P$ is the principal amount (tax amount), $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. First, convert the interest rate $r = 8.7\%=0.087$ and the time $t=\frac{36}{365}$ years, and $P = 725870.81$. Then $I=Prt=725870.81\times0.087\times\frac{36}{365}$.
$I = 725870.81\times0.087\times\frac{36}{365}\approx725870.81\times0.087\times0.09863 = 725870.81\times0.00858081\approx6222.99$

Step2: Calculate the total amount

The total amount $A$ is the sum of the tax amount $P$ and the penalty amount $I$. So $A=P + I$.
$A=725870.81+6222.99 = 732093.80$

Answer:

$732093.80$