Question

sam was charged $1,050 in interest on a loan with a 2.5% interest rate. What was the original amount of the loan it he took 5 years to pay it back?

Answer 1

$8,400

Step-by-step explanation:

The interest can be calculated using the following equation:

`I=\text{P}\cdot r\cdot t`

Where P is the original amount of the loan, r is the interest rate, and t is the time that the person tool to pay it back.

So, we can replace I by $1,050, r by 2.5% or 0.025, and t by 5 years. Then:

`1050=P\cdot0.025\cdot5^{}`

Finally, we can solve for P as:

`\begin{gathered} 1050=P\cdot0.125 \\ (1050)/(0.125)=(P\cdot0.125)/(0.125) \\ 8400=P \end{gathered}`

Therefore, the original amount of the loan was $8,400