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9-37.
  1. Joaquin has agreed to lend his younger brother $45 so that he can buy a new tank for his pet lizard. Homework Help ✎

    1. Joaquin is charging his brother 2% simple interest per month. If his brother pays him back in 6 months, how much will Joaquin get back?

    2. If Joaquin’s brother instead borrowed the money from a bank at 2% compound interest per month, how much would he have to pay the bank at the end of 6 months?

Using the equation for simple interest:

Interest = Prt
P = principal
r = interest rate
t = time

Interest = $45(.02)(6 months)

$50.40

Remember, the total money Joaquin gets back includes the principal and the interest.

Use the equation for compound interest:

Total Amount = P(1 + r)n
P = principal
r = rate
n = number of times compounded