Question

Elsa took out a 2 year loan to buy a car at 6% simple interest rate. If she has to pay $264 in interest, how much principal did she borrow?

Answer 1

Answer:

Principal borrowed is $2,200

Step-by-step explanation:

To know the amount of principal Elsa borrowed to buy a car, we will simply use the simple interest formula;

Simple Interest =  PRT  /  100

Where p = principal

R is the rate

T is the time (in years)

In this case, principal is what we are looking for,  time= 2 years and simple interest = $264

So we will now plug in our variables

Simple Interest =  PRT  /  100

$264      =    P × 6 × 2   /  100

$264    =   12P   / 100

Cross multiply

12P   = $264  ×   100

12P   =  26400

Divide both-side of the equation  by 12

12P/12  =26400/12

(On the left-hand side of the equation 12 will cancel out 12 leaving us with just P and on the right-hand side of the equation 126400 will be divided by 12)

P =   $2,200

Therefore, the principal she borrowed is $2,200

Answer 2

P=I÷rt
P principle borrowed ?
I interest paid 264
R interest rate 0.06
T time 2 years

P=264÷(0.06×2)
P=2,200

Hope it helps :-)