The interest rate on an equity line of credit was 6 3/4 % last year. This year the interest rate is 9 1/2 %. How many percentage points has the interest rate increased?
9 1/2 - 6 3/4 =
8 6/4 - 6 3/4 = ??
We'll be glad to check your answer.
To find the increase in percentage points, we need to calculate the difference between the two interest rates.
First, we convert the mixed numbers into improper fractions:
6 3/4 % = (6 + 3/4) % = 27/4 %
9 1/2 % = (9 + 1/2) % = 19/2 %
Next, we find the difference between the two fractions:
19/2 % - 27/4 %
To subtract fractions, we must have a common denominator. The least common multiple (LCM) of 2 and 4 is 4. Hence, we rewrite the fractions with a common denominator of 4:
19/2 % = 38/4 %
27/4 %
Now we can subtract the fractions:
38/4 % - 27/4 %
= (38 - 27)/4 %
= 11/4 %
Lastly, we convert the fraction back into mixed number format to get the increase in percentage points:
11/4 % = 2 3/4 %
Therefore, the interest rate has increased by 2 3/4 percentage points.