Question

Margo borrows $1600, agreeing to pay it back with 2% annual interest after 7 months. How much

interest will she pay?
Round your answer to the nearest cent, if necessary.

Answer 1

$1,618.67

Explanation:

converting R percent to r a decimal

r = R/100 = 2%/100 = 0.02 per year.

Putting time into years for simplicity,

7 months / 12 months/year = 0.583333 years.

Solving our equation:

A = 1600(1 + (0.02 × 0.583333)) = 1618.666656

A = $1,618.67

The total amount accrued, principal plus interest, from simple interest on a principal of $1,600.00 at a rate of 2% per year for 0.583333 years (7 months) is $1,618.67.