I = Prt where I is the amount of interest, P is the principal
(amount of money borrowed), r is the interest rate (per year),
and t is the time (expressed in years). The formula can also be
expressed as: A = P + I = P(1 + rt) where A is the amount to be
repaid, one must repay both the initial principal and the
interest due on it. One can of course solve the equation for P
or t, but these are generally known quantities. Exercise: If
Sally borrows $300 for six weeks at 8% interest, how much
interest must she pay? What is the total amount she must repay?
If John borrows $400 and has to repay $412 in two months, what
interest rate is he being charged? P = A/(1 + rt) If one is
going to be paid $375 in two weeks, and the interest rate is
12%, the principal one can borrow now is P = $375/(1 +
.12×(2/52)) = $373.28. One can of course also solve for the
interest rate or the time. CompetencyIf one borrows $400 for
eight months at 18% interest, how much interest must one pay?
What is the total amount one must If one borr