Exercise 24 Page 174

If we borrow money from a bank, we pay the bank interest for the use of their money. Similarly, if we have an unpaid balance on a credit card, we also pay interest to the credit card company. 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) We know that Mr. Sprockett borrows $3500 at an interest rate of 7.4 %. We want to find the total amount Mr. Sprockett will be paying if it takes him 2 years to pay back the loan. Keep in mind 7.4 % is written in decimal form as 0.074. p= 3500, r= 0.074, t= 2 To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.

I=prt

SubstituteValues

Substitute values

I= 3500( 0.074)( 2)

Multiply

Multiply

I=518

The interest is equal to $518. To find the total amount Mr. Sprockett will be paying, let's add the interest to the principal. $ 3500+ $ 518=$ 4018 We found that the total amount Mr. Sprockett will be paying is $ 4018. This means that the correct option is H.