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earnstyle [38]
3 years ago
5

A merchant has two loans totaling $20000. The simple interest rates are 6% and 7%. If the annual interest charge on the 6% loan

is $520 more than on the 7% loan, how much did he borrow at each rate?
Mathematics
1 answer:
horrorfan [7]3 years ago
5 0

Answer:

He borrowed $14,769.23 at 6% and $5,230.77 at 7%

Step-by-step explanation:

Let

x ----> loan amount at 6%

20,000 -x ----> loan amount at 7%

we know that

The simple interest formula is equal to

I=P(rt)

where

I is the Final Interest Value

P is the loan amount

r is the rate of interest  

t is Number of Time Periods

in this problem we have

Loan at 6%

t=1\ years\\ P=x\\r=6\%=6/100=0.06

I_1=0.06x  ----> equation A

Loan at 7%

t=1\ years\\ P=20,000-x\\r=7\%=7/100=0.07

I_2=(20,000-x)0.07

I_2=1,400-0.07x  ----> equation B

Remember that

the annual interest charge on the 6% loan is $520 more than on the 7% loan

so

I_1=I_2+520 ----> equation C

substitute equation A and equation B in equation C

0.06x=1,400-0.07x+520

solve for x

0.06x+0.07x=1,400+520\\0.13x=1,920\\x=\$14,769.23\\

Find the value of (20,000-x)

\$20,000-\$14,769.23=\$5,230.77

therefore

He borrowed $14,769.23 at 6% and $5,230.77 at 7%

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