Question

A company borrowed $25,000 at 3.5% and was charged $2,625 in interest. How long was it before the company repaid the money?

Answer 1

The company repaid the money in 3 years.

Solution-

A company borrowed $25,000 at 3.5% and was charged $2,625 in interest.

Considering the interest as simple interest,

`\text{interset}=\frac{\text{Principal}\cdot \text{Rate of interest}\cdot \text{Time period}}{100}`

Here,

Interest = $2625

Principal = $25000

Rate of interest = 3.5% annually

Putting the values,

`\Rightarrow 2625=(25000* 3.5* t)/(100)`

`\Rightarrow t=(2625* 100)/(25000* 3.5)`

`\Rightarrow t=3\ years`

Therefore, the company repaid the money in 3 years.

Answer 2

3 years. Since no mention of compounding was made I will assume that it's 3.5% simple interest. So first, let's calculate what percent of the entire loan was interest. Just a simply matter of division. 2625 / 25000 = 0.105 = 10.5% Now lets' divide the percentage of the loan that was paid in interest by the interest rate. 10.5% / 3.5% = 3 So the company took 3 years to repay the loan.