Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.3 Simple Interest - Exercise Set 8.3: 15


$7.5\% = r$

Work Step by Step

RECALL: The formula for the future value $A$ is: $A=P(1+rt)$ where P = principal amount borrowed r = interest rate per year t = time in years Use the formula above, with $A=\$2150$, $P=\$2000$, and $t=1$, to obtain: $\$2150 = \$2000(1+r \cdot 1) \\\$2150 = \$2000(1+r)$ Divide $\$2000$ on both sides of the equation to obtain: $\frac{2150}{2000} = 1+r \\1.075 = 1+r$ Subtract $1$ on both sides of the equation to obtain: $0.075 = r$ Convert to percent to obtain: $7.5\% = r$
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