Question

Austin borrowed money from a credit union for 4 years and was charged simple interest at an annual rate of 5% the total interest that he paid was $160 how much money did he borrow​

Answer 1

Given:

Rate of simple interest = 5%

Time = 4 years

Total interest = $160

To find:

The amount borrowed by Austin from a credit union.

Solution:

The formula for simple interest is:

$I=\dfrac{P\times r\times t}{100}$

Where, P is principal, r is the rate of interest and t is the number of years.

Putting $I=160,r=5,t=4$ in the above formula, we get

$160=\dfrac{P\times 5\times 4}{100}$

$160=\dfrac{20P}{100}$

$160=\dfrac{P}{5}$

Multiply both sides by 5.

$800=P$

Therefore, Austin borrowed $800 from a credit union for 4 years.