Question

Suppose you borrow money for a year at a simple interest rate of 7.2%. You pay $86.40 in interest. How much have you borrowed?

Answer 1

Answer: 1200

Step-by-step explanation: Linear equation. 7.2x = 100(86.40). then divide by 7.2 on each side. x=1200

Answer 2

$1200

Explanation:

You want to know the amount borrowed at 7.2% if the simple interest for one year is $86.40.

Interest

The interest formula is ...

I = Prt

where P is the amount borrowed, r is the interest rate, and t is the number of years.

Application

Using the given values, we have ...

86.40 = P·0.072·1

P = 86.40/0.072 . . . . . . divide by the coefficient of P

P = 1200

You have borrowed $1200.