Question

Money is borrowed at 10% simple interest. After one year, $980.10 pays off the loan. How much was originally borrowers

Answer 1

Given:

Rate of simple interest = 10%

After one year, $980.10 pays off the loan.

To find:

Original amount of loan.

Solution:

We know that, the simple intersect is

`I=(P* r* t)/(100)`

Where, P is principal, r is rate of interest in percent and t is time in years.

Putting r=10 and t=1, we get

`I=(P* 10* 1)/(100)`

`I=(P)/(10)`

Now, the formula for amount is

`A=P+I`

where, P is principal and I is the interest.

Putting A=980.10 and
`I=(P)/(10)`, we get

`980.10=P+(P)/(10)`

`980.10=(10P+P)/(10)`

`980.10* 10=11P`

`9801=11P`

Divide both sides by 11.

`(9801)/(11)=P`

`891=P`

Therefore, the original amount of loan is $891.