Question

Nellie has a bankruptcy on her credit report and therefore pays higher interest rates on her current loans. She calculates that the extra money she pays in additional interest each year, if invested at the rate of 3% for 5 years, could earn her simple interest totaling $114. Approximately how much does Nellie pay in additional interest each year

Answer 1

Using the simple interest formula, it is calculated that Nellie pays approximately $760 in additional interest each year.

Step-by-step explanation:

To calculate how much Nellie pays in additional interest each year that could have earned her $114 in simple interest over five years, we will use the simple interest formula:

I = P × r × t

Where I is the interest earned, P is the principal amount (the extra money she pays), r is the interest rate (3%), and t is the time in years (5 years).

We are given that I = $114, r = 3% or 0.03 in decimal form, and t = 5 years. Plugging these values into the formula gives us:

$114 = P × 0.03 × 5

To find P, divide both sides by (0.03 × 5):

P = $114 / (0.03 × 5)

P = $114 / 0.15

P = $760

Nellie pays approximately $760 in additional interest each year.

Answer 2

Nellie pays $760 in additional interest each year.

Step-by-step explanation:

Nellie calculates that the extra money she pays in additional interest each year, if invested at the rate of 3% for 5 years, could earn her simple interest totaling $114.

So, here I = 114

r = 3% or 0.03

t = 5

Putting these in simple interest formula:
`I=p* r* t`

`114=p*0.03*5`

=>
`p=(114)/(0.03*5)`

=>
`p=\frac{114}0.15}`

p = $760

Hence, Nellie pays $760 in additional interest each year.