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Money Word Problems
First, we will look at a money word problem involving Interest. Interest word problems are based on the formula for simple interest and the formula for amount.
Then, we will look at a money word problem that involves coins.
Formula for simple interest
i = prt
i represents the interest earned
p represents the principal which is the number of dollars invested
t represents the time the money is invested which is generally stated in years or fractions of a year.
Formula for Amount
A = p + i
A represents what your investment is worth if you consider the total amount of the original investment (p) and the interest earned (i)
Example:
James needs interest income of $5,000. How much money must he invest for one year at 7%? (Give your answer to the nearest dollar)
Solution:
5,000 = p(0.07)1
p = 71,428.57
He must invest $71,429
Example:
Paul has $31.15 from paper route collections. He has 5 more nickels than quarters and 7 fewer dimes than quarters. How many of each coin does Paul have?
Solution:
Let x be the number of quarters x + 5 be the number of nickels x – 7 be the number of dimes