Question

Connor took out a 4 year loan to buy a car at a 4% simple interest rate. if he has to pay $240 in interest, how much principal did he borrow?

Answer 1

The principal borrow for loan is $1,500 .

Explanation:

Given as :

The interest paid on simple interest = s.i = $240

The rate of simple interest applied = r = 4%

The time period for loan = t = 4 years

Let The principal borrow = $p

Now, from Simple Interest method

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

Or. s.i =
`(\textrm p* \textrm r* \textrm t)/(100)`

Or, $240 =
`(\textrm p* \textrm 4* \textrm 4)/(100)`

Or, $240 × 100 = 16 × p

Or, $24000 = 16 × p

∴ p =
`(24000)/(16)`

i.e p = $1,500

So, The principal borrow for loan = p = $1,500

Hence, The principal borrow for loan is $1,500 . Answer