Question

Margo borrows $500, agreeing to pay it back with 4% annual interest after 18 months. How much interest will she pay?

Answer 1

since we know that a year has 12 months, thus 18 months is really 18/12 of a year, so

`~~~~~~ \textit{Simple Interest Earned} \\\\ I = Prt\qquad \begin{cases} I=\textit{interest earned}\\ P=\textit{original amount deposited}\dotfill & \$500\\ r=rate\to 4\%\to (4)/(100)\dotfill &0.04\\ t=years\to (18)/(12)\dotfill &(3)/(2) \end{cases} \\\\\\ I = (500)(0.04)((3)/(2)) \implies I = 30`