Question

What amount of money was loaned if the borrower paid $950 in interest at the end of 6 months and was charged 7% annual interest? $1,083.06 $13,571.86 $27,142.86 $1,900

Answer 1

Answer:

The loan amount was $27,142.86

Explanation:

Data provided in the question:

Total interest paid for the loan amount = $950

Time for which interest is charged = 6 months = 0.5 year

Annual interest rate = 7% = 0.07

Now,

Interest  = Principle × Rate × Time

or

$950 = Principle × 0.07 × 0.5

or

Principle = $950 ÷ 0.035

or

Principle = $27,142.86

Hence,

The loan amount was $27,142.86