You need to borrow $1500 to cover your school expenses for 10 months. After calling several places, you can choose between a money store charging 15% simple interest per year or your family who will charge you 10% per year. How much will you save by borrowing from your family?
A) $62.50
B) $150.00
C) $312.50
D) $750.00

Question

Quizplus · Accepted Answer

The money store charges 15% per year, so for $1500, the interest for one year would be 0.15 * $1500 = $225. Since you're borrowing for 10 months (less than a year), the interest from the money store would be ($225/12)*10 = $187.50. Your family charges 10% per year, so for $1500, the interest for one year would be 0.10 * $1500 = $150. For 10 months, it would be ($150/12)*10 = $125. Therefore, you save $187.50 - $125 = $62.50 by borrowing from your family.

You Need to Borrow $1500 to Cover Your School Expenses