Question

Money is borrowed at 7% simple interest. After one year, $884.89 pays off the loan. How much was originally borrowed?

Answer 1

P = 827

Explanation:

Simple Interest Rate Formula: A = P(1 + r)ⁿ

Step 1: Define variables

A = 884.89

r = 7%

n = 1 year

Step 2: Substitute

884.89 = P(1 + 0.07)¹

Step 3: Solve for P

884.89 = P(1.07)

P = 827