Question

Princess borrowed a sum of money to buy a used car. if she paid $2500 in simple interest at a rate of 3.75% over 5 years, approximately how much was the original loan for ?

a) $486.75
b)$1,367.33
c)$13.333.33
D)$26.666.66

Answer 1

The original loan Princess took out for her used car was approximately $13,333.33, calculated using the simple interest formula based on the $2500 in interest she paid over 5 years at a 3.75% rate.

Step-by-step explanation:

The question aims to determine the original loan amount, based on the simple interest paid over a period. The simple interest formula is Interest = Principal × rate × time, where the principal is the original loan amount, the rate is the interest rate per year, and the time is the number of years for which the loan was taken.

In this case, Princess paid $2500 in simple interest at a rate of 3.75% over 5 years. To find the original loan (principal), we can rearrange the formula to Principal = Interest / (rate × time). Plugging the given values into the formula, we get:

Principal = $2500 / (0.0375 × 5)

Principal = $2500 / 0.1875

Principal = $13,333.33 (rounded to two decimal places)

Therefore, the original loan was approximately $13,333.33.