Question

Kareem borrowed money from a credit union for 3 years and was charged simple interest at an annual rate of 3%. The total interest that he paid was $27. How much money did he borrow?

A) $800
B) $900
C) $1,000
D) $1,200

Answer 1

Using the simple interest formula, we calculate the principal amount borrowed by Kareem. However, the correct principal amount of $300 does not match any of the provided options, indicating a possible issue with the question or options.

Step-by-step explanation:

To determine the amount Kareem borrowed, we need to use the formula for calculating simple interest:

I = PRT

Where I is the interest, P is the principal amount (initial amount borrowed), R is the annual interest rate (expressed as a decimal), and T is the time period in years.

Let's solve for P using the given values:

I = $27
R = 3% or 0.03
T = 3 years

Substituting the values into the formula:

27 = P * 0.03 * 3

To find P, we divide both sides by (0.03 * 3):

P = 27 / (0.03 * 3)
P = 27 / 0.09
P = $300

Since none of the options match $300, it's possible there has been a misunderstanding or typo in the question or the provided options.