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Elsa took out a 2 year loan to buy a car at 6% simple interest rate. If she has to pay $264 in interest, how much principal did she borrow?

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P=I÷rt
P principle borrowed ?
I interest paid 264
R interest rate 0.06
T time 2 years

P=264÷(0.06×2)
P=2,200

Hope it helps :-)
User Neal Wang
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5 votes

Answer:

Principal borrowed is $2,200

Explanation:

To know the amount of principal Elsa borrowed to buy a car, we will simply use the simple interest formula;

Simple Interest = PRT / 100

Where p = principal

R is the rate

T is the time (in years)

In this case, principal is what we are looking for, time= 2 years and simple interest = $264

So we will now plug in our variables

Simple Interest = PRT / 100

$264 = P × 6 × 2 / 100

$264 = 12P / 100

Cross multiply

12P = $264 × 100

12P = 26400

Divide both-side of the equation by 12

12P/12 =26400/12

(On the left-hand side of the equation 12 will cancel out 12 leaving us with just P and on the right-hand side of the equation 126400 will be divided by 12)

P = $2,200

Therefore, the principal she borrowed is $2,200

User Sylber
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