Question

Margo borrows $200, agreeing to pay it back with 4% annual interest after 6 mobths. How much interest will she pay?

Answer 1

$3.96

Explanation:

Use the formula:

`p(1+(r)/(n) )^(nt)`

p is our initial investment

r is the interest rate

n is the term

t is time

doing this we get

`200(1+(.04)/(1))^(0.5)`

where t = 0.5 because the term is 6 months or half a year

We get a value of 203.96 which is the amount of money being paid after 6 months.

The interest is then our initial value of $200 subtracted from our final value.

`203.96-200= 3.96`