Question

Juanita borrowed $600 to purchase a new computer. She was charged 7% interest for two years. She used the simple interest formula to find the interest.

I = 600(7)(2)

What error did Juanita make and how will her error affect the interest she calculates? Explain.

please help

Answer 1

The error she made was multiplyng by 7. This would affect her calculations as 7 in percentage form is represented as 700%. The 700% interest would basically mean she owes 7 times the amount she borrowed. The correct number would be 0.07 because 0.07 represents 7% which is the interest. Another error that was made was multiplying 2 to the entire equation. The only thing that needs to be doubled is the interest as every year the interest takes 7%. The correct way would be to put 0.07*2 in paranthesis. The correct equation is

I = 600(0.07*2)

Answer 2

Juanita did not convert the interest rate into its decimal form. The interest rate used for solving the simple interest should have been 0.07. She could have moved the decimal point two places to the left, or divide 7/100-- either way, the conversion would have resulted to 0.07.

Her original solution will produce an interest of: I = $600(7)(2) = $8,400

In comparison, using 0.07 for the interest rate will result in an interest amount of:

I = $600(0.07)(2) = $84.