Question

Martha borrowed $300 from a lender that charged simple interest at an annual rate of 7 % .When Martina paid off the loan , she paid $105 in interest.How long was the loan for ,in years?

Answer 1

ANSWER

5 years

EXPLANATION

The simple interest formula is,

$i=P\times r\times t$

Where

• i: interested accumulated

,

• P: principal amount

,

• r: annual interest rate

,

• t: time in years

In this problem we know that the principal amount P = 300, the interest rate is r = 7% and the accumulated interest i = 105. We have to find the time t in years,

$105=300\cdot0.07\cdot t$

Solving for t,

$t=\frac{105}{300\cdot0.07}=\frac{105}{21}=5$

The loan was for 5 years.