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Math Help - Rate of Discount

  1. #1
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    Rate of Discount

    The amount of interest earned on A for one year is $336, while the equivalent amount of discount is $300. Find A.
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  2. #2
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    Quote Originally Posted by Jrb599 View Post
    The amount of interest earned on A for one year is $336, while the equivalent amount of discount is $300. Find A.

    You could create 2 simultaneous equations with 2 unknowns: A and the interest/discount rate, call it i. The trick is putting i in the right terms so it cancels when combining the 2 equations.

    For example, one equation...

    A(1 + i) = 336

    After reading TKHunny's response, I see I left a piece of my equation out!! Previous should be...

    A(1 + i) = A + 336

    Sorry.

    Hopefully this heads you in the right direction...?

    -Scott
    Last edited by ScottO; September 17th 2007 at 05:17 AM. Reason: Corrected equation
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  3. #3
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    Quote Originally Posted by Jrb599 View Post
    The amount of interest earned on A for one year is $336, while the equivalent amount of discount is $300. Find A.
    The important idea here is the difference between interest and discount processes.

    Let's talk about short-term loans.

    For Interest, you get A and pay back (A+Interest) later.
    For Discount, you get (A-Discount) and pay back A later.

    This leads to two structures. If 'i' is the rate if interest or discount...

    Interest: A(1+i) = A + Interest
    Discount: (A - Discount)(1+i) = A

    In this case, we know two of the values, the Interest and the Discount:

    Interest: A(1+i) = A + 336
    Discount: (A - 300)(1+i) = A

    Solve for A and i.
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