W10.3

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W10.3

Joe has borrowed £1125.

While Joe is a college, simple interest is added to this amount at a rate of 5% per year.

Calculate the total amount Joe will owe after two years at college.

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Hint:

Careful!!! in Functional Skills Level 1 we only see simple interest. They don't wok like most of the intersts we deal in our lives.

Watch the video if needed.

A simple interest in calculated once from the amount of money borrowed and the mount stay the same and is added year on year for the lenght of the loan.

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answer:

Without a calculator:

5% of 1125 is:

10 % then ÷ 2 = 5%

112.5 ÷ 2 = 56.25

for two years 56.25 x 2 = 112.5

Total owe= 112.5 + 1125 = 1237.5

£ 1237.50 (£ sign in front and two decimals)

with a calculator:

1125 x 0.05 = 56.25

then it's the same

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