00:01
In this problem, we're told that lovato borrows $30 ,900 from her bank to open a forest shop.
00:06
She's going to agree to repay the money in 18 months, and the interest rate is 5 .5%.
00:12
So in part a, what we want to do is determine how much she is going to pay the bank in 18 months.
00:19
Okay.
00:20
Well, the first thing we need to do is figure out how much interest that she's going to earn.
00:24
So to do this, we have to use our simple interest formula, i equals p, rt, where i is the total amount in the interest, p is the amount that's borrowed, r is the percentage, and t is the time in terms of years.
00:39
So let's substitute our values in.
00:41
So i is equal to the amount borrowed, which is $30 ,900 times the rate.
00:47
Remember, we have to turn our percent into a decimal.
00:50
So do that, remove our decimal point two places to the left.
00:53
So we'll have 0 .055.
00:57
And then for the time, remember, it's in terms of years.
01:00
Keep in mind, there's 12 months in a year.
01:02
So it would be 18 divided by 12, which is equal to 1 .5...