Question

3. Jen’s parents buy a tablet for her to use in school. Of the $1500 cost, her parents expect her to pay back $1000 one year later. If interest were calculated monthly, what interest rate on the $1500 value of the tablet are her parents assuming?

Answer 1

33.3%

Explanation:

Using the formula for calculating simple interest as shown;

Simple Interest = Principal * Rate *Time/100

Principal = Cost of tablet = $1500

Interest after one year = $1500-$1000 = $500

Time = 1year

Substituting this values into the formula;

`500 = 1500*rate*1/100\\Cross\ multiplying\\50,000 = 1500 * rate\\Rate = 50,000/1500\\Rate = 33.3%`

The interest rate that her parents assumed is 33.3%