Question

Greg borrowed money from a credit union for 4 years and was charged simple interest at an annual rate of 7%. The total interest that he paid was $1400. How much money did he borrow? ​

Answer 1

Greg borrowed $20,000.

Explanation:

To calculate the principal (the amount borrowed), we can use the formula for simple interest:

I = Prt

where I is the interest, P is the principal, r is the annual interest rate, and t is the time in years.

Given that:

I = 1400

r = 7% (expressed as 0.07)

t = 4

P = I / (r * t) = 1400 / (0.07 * 4) = $20,000

Therefore, Greg borrowed $20,000.