Question

a bank gives you a simple interest loan at a rate of 8.5%. After 5 years you have paid the entire principal plus 101.58 interest. what was the original principal amount of your loan

Answer 1

The principal amount on which the bank gives loan is $ 239.0117

Explanation:

Given as :

The rate of interest = 8.5 % at simple interest

The time period of the loan = 5 years

The interest amount = $ 101.58

Let The principal amount = $ p

From simple interest method

Simple interest =
`(\textrm principal* \textrm rate* \textrm time)/(100)`

Or, $ 101.58 =
`(\textrm $ p* \textrm 8.5* \textrm 5)/(100)`

Or, $ 101.58 × 100 = 42.5 × p

Or, $ 10158 = 42.5 × p

∴ p =
`(10158)/(42.5)`

I.e p = $ 239.0117

So, The principal amount = p = $ 239.0117

Hence The principal amount on which the bank gives loan is $ 239.0117 Answer