Question

Goran borrowed $600 from a lender that charged simple interest at an annual rate of 7%. When Goran paid off the loan, he paid $168 in interest. How long was the loan for, in years?

Answer 1

Answer

4 years

Explanation

Given:

Principal, P = $600

Simple interest, S.I = $168

Rate, R = 7%

What to find:

How long was the loan for, in years? That is time, T

Solution:

Using simple interest formula, the time, T in years can be calculated.

$\begin{gathered} S.I=\frac{P\times R\times T}{100} \\ \\ \Rightarrow T=\frac{S.I\times100}{P\times R} \end{gathered}$

Plugging the values of the given parameters into the formula, we have

$T=\frac{\ 168\times100}{\ 600\times7}=\frac{\ 16800}{\ 4200}=4\text{ }years$

How long was the loan for, in years is 4 years