Question

Marcella purchased a car using a simple interest loan. The loan had an interest rate of 5.5% and was for 3 years. Marcella paid $231 in interest. What was the principal amount of the loan?

a. $1,200

b. $2,100

c. $4,200

d. $42,000

Answer 1

Using the simple interest formula, Marcella's principal loan amount is calculated to be $1,400, which does not match any of the provided options.

Step-by-step explanation:

To calculate the principal amount of Marcella's loan, we can use the formula for simple interest: Interest = Principal × rate × time. Given the interest that Marcella paid ($231), the annual interest rate (5.5%), and the time the loan was taken out for (3 years), we can rearrange the formula to solve for the principal.To find the principal amount of the loan, we can use the simple interest formula: Interest = Principal × Rate × Time. We know that the interest is $231, the rate is 5.5%, and the time is 3 years.

Plugging these values into the formula, we get: $231 = Principal × (0.055) × 3.Simplifying the equation, we have: Principal = $231 / (0.055 × 3) = $1400Therefore, the principal amount of the loan was $1400.The rearranged formula is Principal = Interest / (rate × time). Plugging in the given values:Principal = $231 / (0.055 × 3)Principal = $231 / 0.165Principal = $1,400Looking at the provided options, none of them match the calculated principal of $1,400. Thus, it appears there may be an error with the options given.