Question

Ahmed takes out a loan charging 6.7% simple interest for 10 years.

At the end of 10 years Ahmed pays back $1278 in just interest. Round your answer
to the nearest penny. The original amount of the loan (principal) was
A/
Round your answer to the nearest penny..

Answer 1

$1907.46

Explanation:

You want the principal amount of a 10-year loan that earns $1278 in simple interest at the annual rate of 6.7%.

Simple Interest

The interest is given by the formula ...

I = Prt

Solving for P gives ...

P = I/(rt)

P = $1278/(0.067·10) ≈ $1907.46

The amount of the loan was $1907.46.

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