Question

A man received 7 per cent interest on a loan of $800 for one year. How much interest did he receive? A.) $56 B.) $560 C.) $780 D.) $870 D.) None of these​

Answer 1

Answer:

A.) $56

Step-by-step explanation:

1.  Convert 7% into the numerical version by either

    A. Moving the decimal two spaces to the right, giving us .07

                                               or

    B. Making 7% into a fraction, 7/100

2. Now make an equation with the total amount of money (M) multiplied by the interest (P) inside of parenthesis. This will give us 7% of $800 in your case.

                                        (800 × .07) → 56

3.  Then, multiply by the number of years the interest has been accumulated.

                                              56 × 1

The official equation for this is: a = p(1 + r)^t

a = amount at end (initial amount + interest gained)

p = initial amount

r = rate (percent interest)

t = time in years