Question

matias dreams of opening a food truck business. he needs to borrow $10,000 to buy the truck. the $10,000 is called the principal. banks charge interest on the principal. matias bank charges a ? (rate) of 12%. thats a ? (rate) of 1% per month. after one year, matias will owe interest of 12% of the $10,000 principal. written as a fraction, the ? (number) is 12 and the ? (number) is 100. so, $10,000 × 12/100 = $1,200. the bank also charges a $99 application ? (fee). matias thinks he will owe $1,200 + $99 = $1,299. what is he missing? matias forgot about the $10,000. he will have to pay the ? (principal) back, too! he will owe the bank a total of $10,000 + $1,299 = $11,299. the interest and the fee will be $1,299/$11,299 ≈ 11.5% of the total amount owed. thats a ? (rate) ratio. the interest and fee are $1,299/$10,000 = 12.99% of the principal. thats a ? (rate) ratio.
matias needs to know how much he will owe the bank after one year. explain why his math is wrong.
$10,000 × .12 + $99 = $1,299

Explanation:

Step1: Identify the total amount owed

To find the total amount Matias owes the bank, we need to consider the principal (the amount borrowed), the interest, and the application fee. The principal is $10,000, the interest is calculated as LXI0, and the application fee is $99.

Step2: Calculate the total amount

The total amount owed is the sum of the principal, the interest, and the application fee. So we add \( \$10,000 + \$1,200 + \$99 \).

First, add the principal and the interest: \( \$10,000 + \$1,200 = \$11,200 \).

Then, add the application fee: \( \$11,200 + \$99 = \$11,299 \).

Matias' calculation was wrong because he forgot to include the principal (\$10,000) in the total amount he owes. He only added the interest (\$1,200) and the application fee (\$99), but the total amount owed should also include the money he borrowed (the principal).

Answer:

Matias forgot to include the principal (\$10,000) in his calculation. The correct total amount he owes the bank is \$11,299 (calculated as \$10,000 (principal) + \$1,200 (interest) + \$99 (application fee)).