Question

Goran borrowed $600 from a lender that charged simple interest at an annual rate of 7%. When Goran paid off the loan, he paid $168 in interest. How long was the loan for, in years?

Answer 1

4 years

Step-by-step explanation

Given:

Principal, P = $600

Simple interest, S.I = $168

Rate, R = 7%

What to find:

How long was the loan for, in years? That is time, T

Solution:

Using simple interest formula, the time, T in years can be calculated.

`\begin{gathered} S.I=(P* R* T)/(100) \\ \\ \Rightarrow T=(S.I*100)/(P* R) \end{gathered}`

Plugging the values of the given parameters into the formula, we have

`T=(\$168*100)/(\$600*7)=(\$16800)/(\$4200)=4\text{ }years`

How long was the loan for, in years is 4 years