Question

Find the amount borrowed if $900 is due at the end of 16 months.

a) $750
b) $825
c) $850
d) $875

Answer 1

To find the amount borrowed, use the formula Principal = Amount / (1 + (interest rate * time)). After plugging in the given values, the principal is approximately $825.

Step-by-step explanation:

To find the amount borrowed, we need to calculate the principal that will accumulate to $900 after 16 months with interest.

The formula for calculating the principal is:

Principal = Amount / (1 + (interest rate * time))

Plugging in the given values and solving the equation:

Principal = $900 / (1 + (0.068 * 16/12))

Principal = $900 / (1 + 0.0907)

Principal = $900 / 1.0907

Principal ≈ $825

Therefore, the amount borrowed is approximately $825, so the correct answer is (b) $825.