00:01
All right, to solve this problem, i use the formula a equals p times 1 plus r over n to the nt power.
00:10
Margot borrows $1 ,200, so that's going to be your principal amount.
00:14
That's how much you're initially taking out.
00:17
And it's agreeing to pay it back with 8 % annual interest.
00:21
Well, that's the r.
00:22
8 % interest looks like .08 because you have to move the decimal point two places to the left in order to input the rate.
00:30
N is the number of times your money is compounding, and it's just saying it's an annual interest, so it's just going to compound one time, so that n gets used twice in both places.
00:41
And she wants it after 18 months.
00:43
Now, the kicker here is to make sure that we know this time is always in years, and 18 months is a year and six months, so we're going to consider that to be 1 .5 years...