Ana agrees to pay 8% simple interest for a computer over 3 years.

Question

Part A

If Ana pays a total of $312 in interest, how much money did the computer cost?

$

Part B

If the simple interest rate were 5% instead of 8%, how much would Ana save in interest?

$

Answer 1

Part A:

Let the principal amount of the computer be P.

Simple Interest = (Principal * Rate * Time) / 100
312 = (P * 8 * 3) / 100
312 = 24P / 100
312 * 100 = 24P
31200 = 24P
P = 31200 / 24
P = $1300

Therefore, the computer cost $1300.

Part B:

If the simple interest rate were 5%, the total interest paid by Ana would be:

Total Interest = (P * Rate * Time) / 100
Total Interest = (1300 * 5 * 3) / 100
Total Interest = 195

Ana would save $312 - $195 = $117 in interest.