Question

You decided it is important to pay off some of your debt to help build your credit score. If you paid $1,308 interest on $45,400 at 5%, what was the time, using exact interest?

Answer 1

6.9 months

Explanation:

We can use the formula for simple interest to solve for the time (in years) it takes to pay off the debt:

I = Prt

Where I is the interest paid, P is the principal (the amount of money borrowed), r is the interest rate (as a decimal), and t is the time (in years).

Substituting the given values, we get:

1,308 = 45,400 x 0.05 x t

Simplifying, we get:

1,308 = 2,270t

Dividing both sides by 2,270, we get:

t = 1,308/2,270

t = 0.5751 years

To convert years to months, we multiply by 12:

t = 0.5751 x 12

t ≈ 6.9 months