Justin borrow $6,000 from a credit union for 2 years.
What is Principal amount?
The amount of money initially borrowed from the lender, and as the loan is repaid, it can also refer to the amount of money still owed, is called Principal amount.
Given that;
Simple interest = $840
Time = 2 years
Annual rate = 7%
Now, The formula for calculate the principal amount is,
Simple interest = Principal amount × Rate × time / 100
Principal amount = Simple interest × 100 / Rate × time
Hence,
Principal amount = 840 × 100 / 7 × 2
Principal amount = 84,000 / 14
Principal amount = $6000
So, Justin borrow $6,000 from a credit union for 2 years.
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