Question

A company borrowed $25000 at 3.5% and was charged $2625 in interest. How long was it before the company repaid the money?

Answer 1

To solve this, we are going to use the simple interest formula:
`A=P(1+rt)`
where

`A` is the total amount the company paid after
`t` years.

`P` is the money that the company borrowed

`r` is the interest rate in decimal form

Notice that if the company paid $2625 in interest, the total amount that the company paid was the interest plus the amount they borrowed, so:

`A=25000+2625`

`A=27625`
Next, we are going to convert the interest rate to decimal form. To do that we are going to divide the rate by 100%

`r= (3.5)/(100)`

`r=0.035`

Now we know that
`A=27625`,
`P=25000`, and
`r=0.035`. So lets replace those values in our simple interest formula to find
`t`:

`A=P(1+rt)`

`27625=25000(1+0.035t)`

`(27625)/(25000) =1+0.035t`

`1+0.035t=1.105`

`0.035t=1.105-1`

`0.035t=0.105`

`t= (0.105)/(0.035)`

`t=3`

We can conclude that the company repaid the money after 3 years.