Question 868697: I am tutoring a student and should probably know how to get this, but so far we have not come up with the correct solution:
Jose borrows $400 from his brother to fix his car. His brother doesn't like lending Jose money and so charges him 3% interest per month.
Write a rule in the "y=..." form that will give the amount of money, y, Jose will owe his brother after n months, assuming that he doesn't make any payments.
We thought it would be y=$400 x .03n, however, she missed it on the test and has the opportunity to correct it as homework. Can you assist with the formula we should use please.
Thank you so much!
Devona White
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! I understand the problem as:
Jose borrows $400 from his brother to fix his car. His brother doesn't like lending Jose money and so charges him 3% interest per month.
Write a rule in the "y=..." form that will give the amount of money, y, Jose will owe his brother after n months, assuming that he doesn't make any payments.
The answer depends on whether this is simple interest or compound interest.
If it is simple interest, then the answer will be:
y = $400 + $400 * .03*n
It's the same formula you used only you forgot to include the principal that has to be repaid.
If he is charging you compound interest, then you will be paying interest on the interest that has accrued and you will owe more at the end.
In the compound interest case, the formula will be y = $400 * (1.03)^n.
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