Use the simple interest formula I=Prt, where I is the interest, P the principal, r the annual interest rate, and t the time in years.
$ 1266.9
Practice makes perfect
If we borrow money from a bank, we pay the bank interest for the use of their money. Similarly, if we open a savings account, the bank deposits extra money on this account as interest. To calculate the interest I, we use the simple interest formula.
I= P r t, where...
I& = Interest
P& = Principal
r& = Annual interest rate
t& = Time (in years)
In this case, we are told that a family borrows money for a Rainforest Tour. We are given some information about the cost of the tour. Let's first find the total cost of the tour.
$ 940 + $ 170+ $ 120 = $ 1230
The tour costs $ 1230. This means that the family originally borrows $1230 for the tour with an annual interest rate of 12 %. We want to calculate the total amount that the family pays after 3 months. Keep in mind that 3 months represents 312 years and 12 % is written in decimal form as 0.12.
P= 1230, r= 0.12, t= 3/12
To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.
After 3 months, the interest accrued is $36.9. The total amount which the family pays is equal to the sum of the original loan and the accrued interest.
$ 1230+ $ 36.9=$ 1266.9
The total amount which the family pays after 3 months is $ 1266.9.
