Question

Money is borrowed at 10% simple interest. After one year, $980.10 pays off the loan. How much was originally borrowers

Answer 1

Given:

Rate of simple interest = 10%

After one year, $980.10 pays off the loan.

To find:

Original amount of loan.

Solution:

We know that, the simple intersect is

$I=\dfrac{P\times r\times t}{100}$

Where, P is principal, r is rate of interest in percent and t is time in years.

Putting r=10 and t=1, we get

$I=\dfrac{P\times 10\times 1}{100}$

$I=\dfrac{P}{10}$

Now, the formula for amount is

$A=P+I$

where, P is principal and I is the interest.

Putting A=980.10 and $I=\dfrac{P}{10}$, we get

$980.10=P+\dfrac{P}{10}$

$980.10=\dfrac{10P+P}{10}$

$980.10\times 10=11P$

$9801=11P$

Divide both sides by 11.

$\dfrac{9801}{11}=P$

$891=P$

Therefore, the original amount of loan is $891.