Question

You have two loans, for 2 years each. The total interest for the two loans is $138. On the first loan, you pay 7.5% simple interest on a principal of $800. On the second loan, you pay 3% simple interest. What is the principal for the second loan?

Answer 1

Hi there! Interest on the first loan is 800×.075×2=120. The interest on the second loan is 138-120=18. Now, we have to use the simple interest formula. 18=P×.03×2=300. Therefore, the answer is $300.

Answer 2

$300

Explanation:

We are told that you have two loans, for 2 years each. The total interest for the two loans is $138. On the first loan, you pay 7.5% simple interest on a principal of $800.

Let us find the amount of interest for 1st loan.

`I=Prt`, where,

I = Amount of interest,

P = Principal amount,

r = Interest rate in decimal form,

t = Time

Let us convert our given rate for 1st loan in decimal form

`7.5\%=(7.5)/(100)=0.075`

`I=\$800*0.075*2`

`I=\$800*0.15`

`I=\$120`

Now let us find the amount interest for 2nd loan.

`\text{Amount of interest for 2nd loan}=\$138-\$120`

`\text{Amount of interest for 2nd loan}=\$18`

Let us convert our given rate for 2nd loan in decimal form

`3\%=(3)/(100)=0.03`

Upon substituting our given values for 2nd loan in interest formula we will get,

`\$18=P*0.03*2`

`\$18=P*0.06`

`(\$18)/(0.06)=(P*0.06)/(0.06)`

`\$300=P`

Therefore, the principal amount for the 2nd loan is $300.