Question

A store offers customers two ways to pay for a new TV. Option 11: Pay $1,500$1,500 today. Option 22: Pay nothing today, and take out a simple interest loan to pay a total of $1,650$1,650 one year from now. What is the simple interest rate on the loan in option 22?

Answer 1

Let's solve for the simple interest rate on the loan in option 2. We formulate an equation by enumerating the following:
Option 1: If the customer pays today, the amount needed is only $1500.
Option 2: If the customer pays after 12 months, the total amount is $1650.
The equation is $1500+ ($1500x%charge) =$1650. Solve for % charge after 12 months, %charge = ($1650-$1500) /$1500 %charge =0. 1 or 10%

Therefore, the percent charge after 12 months is 10%.