Question

Ron Tagney owns his own truck. His June interest is $210. The current rate of interest is 11%. Assuming a 360 day year, what was Ron's principal balance at the beginning of June?

Answer 1

I wonder if this is not a trick question. It says he owns his own truck. That would mean no payment. Plus there doesn't seem to be enough info. Like how long has he had the loan? Just a thought maybe it's $0

Answer 2

Ron's principal balance at the start of June was $22,909.09

Explanation:

The simple interest formula is given by:

`E = P*I*t`

In which E are the earnings(interest), P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time, in years.

In this problem, we have that:

His June interest is $210, so
`E = 210`.

The current rate of interest is 11%, so
`I = 0.11`

June has 30 days, and we are assuming 360 days an year. So
`t = (30)/(360) = (1)/(12)`

We want to find P

`E = P*I*t`

`210 = P*0.11*(1)/(12)`

`0.009166P = 210`

`P = 22,909.09`

Ron's principal balance at the start of June was $22,909.09