Math Problem Statement
Margo borrows $500, agreeing to pay it back with 5% annual interest after 9 months. How much interest will she pay?
Round your answer to the nearest cent, if necessary.
Solution
To calculate the interest Margo will pay, we can use the simple interest formula:
Where:
- is the interest,
- is the principal (the amount borrowed),
- is the annual interest rate (in decimal form),
- is the time the money is borrowed (in years).
Given:
- (the amount borrowed),
- (annual interest rate),
- years (since 9 months is 3/4 of a year).
Now, substitute these values into the formula:
Let's calculate the interest.
Margo will pay $18.75 in interest after 9 months.
Would you like more details or have any questions?
Here are 5 related questions:
- What is the total amount Margo will need to repay after 9 months?
- How would the interest change if the loan period was 1 year instead of 9 months?
- What if the interest rate was compounded monthly instead of using simple interest?
- How does simple interest differ from compound interest?
- How would the interest change if Margo borrowed $1,000 instead of $500?
Tip: Always confirm whether interest is simple or compounded, as this can greatly affect the total repayment.
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Math Problem Analysis
Mathematical Concepts
Simple Interest
Percentages
Time Conversion (Months to Years)
Formulas
Simple Interest Formula: I = P * r * t
Theorems
-
Suitable Grade Level
Grades 8-10
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