Question

Gwen borrows $300 from her parents to buy a bike. She agrees to pay them back plus 3% simple interest over one year. Write an equation to represent the total amount Gwen will owe her parents. What is the total amount of money Gwen will owe her parents?

Answer 1

$309

Explanation:

Use the formula for simple interest:
`A = P(1+rt)`

A represents total amount, unknown in this case.

P represents principal, or starting amount, 300 in this case.

r represents the interest rate in decimal form, 3% in this case, or 0.03.

t represents time, usually in years, 1 in this case.

`A = P(1+rt)`

`A = 300(1+(0.03)(1))`

`A = 300(1.03)`

`A = 309`

Gwen will owe $309.