Question

If a loan is taken out for $278 at 10% and costs the borrower $174.12 in simple interest, how many years was the loan for? ROUND YOUR ANSWER TO THE NEAREST WHOLE YEAR

Answer 1

Data:

Loan=$278 at 10%

A simple interest is calculated for payments on the initial capital.

If the total interest was $174.12.

If the interest is on a year. You calculated the interes of one year. The 10% of $278:

$278\cdot\frac{10}{100}=27.8$

In a year the interest is $27.8.

Then, $174.12 divided into $27.8 is the number of years of the loan:

$\frac{174.12}{27.8}=6.26\approx6$Then, the loan was for 6 years