Question

A business pays $5,250 in interest for a loan over 5 years. If the interest rate is 7.5%, what was the original amount of the loan that the business borrowed? i

Answer 1

Given:

Interest = $5,250

Time, t = 5 years

Interest rate = 7.5% = 0.075

Let's find the original amount borrowed.

Apply the formula:

`I=PRT`

Here, we are to find the principal P.

Rewrite the formula for P:

`P=(I)/(RT)`

Where:

I = 5250

R = 0.075

T = 5

Thus, we have:

`\begin{gathered} P=(5250)/(0.075*5) \\ \\ P=(5250)/(0.375) \\ \\ P=14000 \end{gathered}`

Therefore, the original amount borrowed was $14000.

ANSWER:

$14000