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7 April, 07:44

Molly Ellen, bookkeeper for Keystone Company, forgot to send in the payroll taxes due on April 15. She sent the payment November 8. The IRS sent her a penalty charge of 6.40% simple interest on the unpaid taxes of $1,400. Calculate the penalty. (Remember that the government uses exact interest.)

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  1. 7 April, 08:12
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    Answer: $50.81

    Explanation:

    Simple interest = principal x rate x time

    The principal was $1,400

    The rate is 6.40% (0.064)

    The chart indicates that it is 207 days from April 15 to Nov 8

    Therefore the amount of time is (207/365).

    Simple interest = principal x rate x time

    Simple interest = $1,400 x 0.064 x (207/365)

    Simple interest = $50.81

    Therefore the penalty is $50.81
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