Question

Mia agreed to borrow a 3 year loan with 4 percent interest to buy a motorcycle if Mia will pay a total of $444 in interest how much money did she borrow how much interest would Mia pay if the simple interest rate was 5 percent

Answer 1

a) $3700

b) $555

Explanation:

The length of the loan is 3 years.

The interest after 3 years is $444.

The rate of the Simple Interest is 4%.

Simple Interest is given as:

I = (P * R * T) / 100

where P = principal (amount borrowed)

R = rate

T = length of years

Therefore:

`444 = (P * 3 * 4) / 100\\\\444 = 12P / 100\\\\12P = 444 * 100\\\\12P = 44400\\\\P = 44400 / 12\\`

P = $3700

She borrowed $3700

b) If the simple interest was 5%, then:

I = (3700 * 5 * 3) / 100 = $555

The interest would be $555.