Answer
The amount of loan that can be afforded = $6605.5
Explanation
Paying $200 per month for 3 years = 3 × 12 × $200 = $7200
So, we can use this to find the amount of loan acquirable.
Let that amount of loan be x dollars.
Simple Interest = (PRT/100)
where
P = Principal = The amount borrowed = x dollars
R = Rate = 3%
T = Time = 3 years
Total amount to be returned = Principal + Simple interest
7200 = x + Simple Interest
Simple Interest = (PRT/100) = (x × 3 × 3/100) = 0.09x
7200 = x + 0.09x
7200 = 1.09x
Divide both sides by 1.09
1.09x = 7200
(1.09x/1.09) = (7200/1.09)
x = $6605.5
Hope this Helps!!!
