Question

Margo borrows $1300, agreeing to pay it back with 7% annual interest after 6 months. How much interest willshe pay?Round your answer to the nearest cent, if necessary.$

Answer 1

Recall the formula for determining the interest using simple interest

$\begin{gathered} I=Prt \\ \text{where} \\ P\text{ is the principal amount} \\ r\text{ is the rate in decimal form} \\ t\text{ is time} \end{gathered}$

Convert the rate into decimal form by dividing by 100%

$7\%\div100\%=0.07$

Substitute the following values

P = $1300, r = 0.07, t = 6/12 (12 months in a year, only 6 months has passed)

$\begin{gathered} I=Prt \\ I=1300\cdot0.07\cdot\frac{6}{12} \\ I=91\cdot\frac{1}{2} \\ I=45.5 \end{gathered}$

Therefore, Margo will pay back $45.50 in interest.