Problem

Solve the problem. See Examples 7 and 8.Measuring risk. The Friendly Bob Loan Company give...

Solve the problem. See Examples 7 and 8.

Measuring risk. The Friendly Bob Loan Company gives each applicant a rating, t, from 0 to 10 according to the applicant’s ability to repay, a higher rating indicating higher risk. The interest rate, r, is then determined by the function r = 0.02t + 0.15.

a) If your rating were 8, then what would be your interest rate?


b) Sketch the graph of the equation for t ranging from 0 to 10.

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