Question

David borrowed money from a credit union for 3 years and was charged simple interest at an annual rate of 6%. The total interest that he paid was $108. How much money did he borrow?

a) $600
b) $900
c) $1200
d) $1800

Answer 1

David borrowed $600.

Step-by-step explanation:

To calculate the amount of money David borrowed, we can use the formula for simple interest, which is Interest = Principal x Rate x Time. We know that the interest he paid is $108, the rate is 6%, and the time is 3 years.

We can rearrange the formula to solve for the principal: Principal = Interest / (Rate x Time). Substituting the given values, we get Principal = $108 / (0.06 x 3) = $600.

Therefore, David borrowed $600 (option a).