Question

Vince borrows $900 to buy a couch. He will pay off the loan by paying 1.5% simple interest for 2 years. Vince incorrectly calculates the amount he will pay back using the expression below. 900 + 900(1.015 • 2) What is the correct amount Vince will pay back altogether?

A. $903; Vince should have subtracted the first 900 from the amount
he will pay.

B. $913.50; Vince multiplied by the wrong number of years.

C. $927; Vince wrote the wrong number to represent the interest rate.

D. $1,813.50; Vince forgot to add the initial $900 to the amount he will pay.

Answer 1

Answer: C

Explanation:

Answer 2

Answer: The correct amount Vince will pay back altogether is $927 and this can be determined by using the simple interest formula.

Step-by-step explanation:

Given :

Vince borrows $900 to buy a couch.

He will pay off the loan by paying 1.5% simple interest for 2 years.

Vince incorrectly calculates the amount he will pay back using the expression below. 900 + 900(1.015 2).

The following steps can be in order to determine the correct amount Vince will pay back altogether:

Step 1 - The formula of simple interest can be used in order to determine the correct amount Vince will pay back altogether.

Step 2 - The formula of simple interest is given below:

where A is the final amount, P is the principal amount, R is the interest rate, and T is the time.

Step 3 - Substitute the values of the known terms in the above expression.

A = 900(1 + 1.015 2)

Step 4 - Simplify the above expression.

A = $927