Question

Vince borrows $900 to buy a couch. He will pay off the loan by paying 1.5% simple interest for 2 years. Vince incorrectly calculates the amount he will pay back using the expression below. 900 + 900(1.015 • 2) What is the correct amount Vince will pay back altogether?

A. $903; Vince should have subtracted the first 900 from the amount
he will pay.

B. $913.50; Vince multiplied by the wrong number of years.

C. $927; Vince wrote the wrong number to represent the interest rate.

D. $1,813.50; Vince forgot to add the initial $900 to the amount he will pay.

Answers

  2. Answer: The correct amount Vince will pay back altogether is $927 and this can be determined by using the simple interest formula.
    Step-by-step explanation:
    Given :
    Vince borrows $900 to buy a couch.
    He will pay off the loan by paying 1.5% simple interest for 2 years.
    Vince incorrectly calculates the amount he will pay back using the expression below. 900 + 900(1.015  2).
    The following steps can be in order to determine the correct amount Vince will pay back altogether:
    Step 1 – The formula of simple interest can be used in order to determine the correct amount Vince will pay back altogether.
    Step 2 – The formula of simple interest is given below:
    where A is the final amount, P is the principal amount, R is the interest rate, and T is the time.
    Step 3 – Substitute the values of the known terms in the above expression.
    A = 900(1 + 1.015  2)
    Step 4 – Simplify the above expression.
    A = $927

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