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- If John borrows $3000 at an annual interest rate of 12%, how much interest will John have to pay for one year?

- My answer that I got was $360, is this correct? And, if you don't mind, could you show me the steps to solve this problem? Thanks.

Your answer is correct. The steps to solve this problem are: convert the percent, p (= 12% in this case) into a factor, f. Then the amount that John has to pay in interest after a year, y, is the original amount, x (= $3000) times this factor, i.e., y = x･f. The formula is

y = x･p/100 = 3000(12/100) = 3000(0.12) = 360.

Note that if the interest is 100%, then the interest payment (after 1 year) is equal to the original amount, y = 3000(100/100) = 3000.

Hope this helps. Ask a follow-up if you need clarification.

Randy

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