Problem 968

Linda Davis agreed to lend money to Alex Luciano at a special interest rate of 7% per year, on the condition that he borrow enough that he would pay her 1000 in interest over a period of 6 years.  What was the minimum amount Alex could borrow?




The interest rate is 7% per year, the interest is 1000, the time  is 6 years. The principal is the missing value. The appropriate formula

is P = \frac{I}{RT}.

Substitute the given values into the formula. Use decimal notation for the interest rate.

P = \frac{1000}{0.07(6)}

Evaluate the value of P and round the answer to the nearest cent.

P = \frac{1000}{0.07(6)}

\approx 2380.95

Thus, the minimum amount Alex could borrow is 2380.95.


Leave a Reply

Your email address will not be published. Required fields are marked *