Jane took out a loan for college with and interest rate of 5.75%. She does not have to make payments on the loan until she graduates in four years. After four years, the loan has increased $11960 in interest. Find the original amount of the loan.

Question

Omar Holder

Mathematics

28 March, 19:24

Jane took out a loan for college with and interest rate of 5.75%. She does not have to make payments on the loan until she graduates in four years. After four years, the loan has increased $11960 in interest. Find the original amount of the loan.

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Answers (1)

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Terrance Herman · Answer 1

Answer: the original amount of the loan is $52000

Step-by-step explanation:

Let P represent the original amount of the loan. We would apply the formula for determining simple interest. It is expressed as

I = PRT/100

Where

P represents the principal or the original amount of the loan.

R represents interest rate.

T represents the duration for which the loan was given in years

I represents the interest.

From the information given,

R = 5.75%

T = 4 year

After four years, the loan has increased $11960 in interest. This means that

I = 11960

Therefore,

11960 = (P * 5.75 * 4) / 100

11960 = 23P/100 = 0.23P

P = 11960/0.23

P = 52000