Question

Lisa borrowed money at a 6% simple interest rate. IF she paid back a total of $8000 at the end of 10 years, how much did she originally borrow? Write your answer appropriately as dollars and cents.

Answer 1

Answer:

The original amount borrowed = $4,467.158

Explanation:

We need to determine the present value

Present value = FV/((1+r)^n)

FV = $8,000

r = 6%

n = 10

Inserting the figures in the formula mentioned above:

PV = $8,000/(1+0.06)^10

PV = $4,467.158