Question

Mia agrees to borrow a 3-year loan with 4% simple interest to buy a motorcycle

Part A -

If Mia will pay a total of $444 in interest, how much money did she initially borrow?

Part B -

How much interest would Mia pay if the simple interest rate were 5%?

Answer 1

Part A : She borrowed $ 3700.

Part B : She would pay $ 555 interest.

Explanation:

Since, simple interest is,

`S.I.=(P* r* t)/(100)`

Where, P is the principal amount,

r is the annual rate of interest,

t is time ( in years ),

Part A : Here, S.I. = $ 444,

t = 3 years,

r = 4 %,

Thus,

`444=(P* 3* 4)/(100)`

`\implies P=(444* 100)/(3* 4)`

`=(44400)/(12)`

`=3700`

Hence, She borrowed $ 3700.

Part B :

Here, r = 5 %, t = 3 years, P = $ 3,700,

`\implies S.I.=(3700* 5* 3)/(100)`

`=(55500)/(100)`

`=555`

Hence, She would pay $ 555 interest.