Question

A company offering short term loans agrees to lend Nick $1,200. The amount (plus interest) is repayable in one year, and the interest rate is 12% per month. What is the total amount that must be repaid? Give your answer in dollars to the nearest dollar.

Answer 1

Answer:

The total amount that must be repaid is $2,928.

Step-by-step explanation:

First, you need to know how much interest Nick will be paying every month.

Provided that he borrowed $1,200 with a 12% interest rate, then, you can calculate the interest rate per month by multiplying these numbers.

So, $1,200 × 12% (0.12) = $144 (interest per month)

In order to get the total amount of interest in one year, you can multiply $144 with 12 (12 months).

So, $144 per month × 12 months = $1,728 (the total amount of interest in 1 year)

In order to get the total amount to be repaid, then you have to add the amount which Nick loaned ($1,200) plus the total amount of interest in 1 year.

So, $1,200 + $1,728 = $2,928

The total amount that Nick needs to repay is $2,928.