Chapter 6.1, Problem 6R

To determine

To analyze: The amount to be received and paid by the person.

Explanation of Solution

The simple interest can be calculated as:

  $\text{SI = }\frac{\text{P × R × T}}{\text{100}}$

Here, P = Principle

R = Rate of interest

T = Time

When P = $1,000, R = 0.5%, T = 12 months

The simple interest can be calculated as:

  $\begin{array}{c}\text{SI = }\frac{\text{\$1,000 × 0}\text{.5 × 12}}{\text{100}}\\ =\$60\end{array}$

Hence, when $1,000 is in the account, the person would make $60 of interest.

When P = $1,000, R = 2%, T = 12 months

The simple interest can be calculated as:

  $\begin{array}{c}\text{SI = }\frac{\text{\$1,000 × 2 × 12}}{\text{100}}\\ =\$240\end{array}$

So, with $1,000 debt on card, the person would lose $240 of interest.