Question

Mr. Noel borrowed money from his cousin at a rate of 10% simple interest. After 1 year, $440

paid off the loan. How much did Mr. Noel originally borrow?

Answer 1

$400

Explanation:

Using the formula for calculating the simple interest expressed as;

Simple Interest = Principal * rate * time/100

Note that the principal is the amount he originally borrowed

I = PRT/100 ............ 1

Amount paid off A = Principal+Interest

A = P+I ............ 2

From equation 2; I = A-P......... 3

Substitute equation 3 into 1;

A-P = PRT/100

Given A = $440, R = 10%, Time = 1year

Substitute the given parameters into the resulting equation;

440 - P = P*10*1/100

440-P = 10P/100

440-P = 0.1P

440 = 0.1P+P

440 = 1.1P

Divide through by 1.1;

1.1P/1.1 = 440/1.1

P = $400

Hence the amount Mr Noel originally borrow is $400