Question

Elsa took out a 2-year loan to buy a car at a 6% simple interest rate. If she has to pay $264 in interest, how much principal did she borrow? ***REMEMBER - you must find out how much interest she will pay in 1 year!!!

Answer 1

Explanation:

Given as :

The time period for the car loan = t = 2 years

The rate of interest applied = r = 6% at simple interest

The interest amount = S.I = $264

Let The principal amount which Elsa borrowed = $p

Now, From simple interest method

Simple Interest = 

Or, S.I = 

Or, $264 = 

Or, $264 × 100 = 12 × p

Or, p = 

∴ p = $2200

So, The principal she borrowed = p = $2200

Hence,The Principal amount that Elsa borrowed for the car loan is $2200 . Answer