Final answer:
Eric borrowed $20,000 at a 3% interest rate to fund his trip to New Zealand. This was calculated by setting up and solving a system of equations based on the given total loan amount and the total interest paid after one year. Option A is correct answer.
Step-by-step explanation:
The question involves determining the amount borrowed at a 3% interest rate given the total interest on two loans after one year. This requires setting up and solving a system of equations. Let's denote x as the amount loaned at 3% and y as the amount loaned at 7%. The total amount borrowed is $50,000.
We have two equations based on the given information:
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- x + y = 50,000 (the sum of both loans)
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- 0.03x + 0.07y = 2,700 (the total interest from both loans after one year)
We can solve this system of equations using substitution or elimination. If we rearrange the first equation to solve for y, we get y = 50,000 - x. Substituting this into the second equation gives us:
0.03x + 0.07(50,000 - x) = 2,700
Simplifying the equation:
0.03x + 3,500 - 0.07x = 2,700
-0.04x = -800
x = 20,000
Eric borrowed $20,000 at a 3% interest rate. Therefore, the answer is A. $20,000.