A person borrows $4000 at a simple interest rate of 7%.They agree to repay the loan with payments of X at the end of 2 months,2X at the end of 4 months,and 2X at the end of 6 months.Using 6 months as the focal date,what is X?
A)$798.20
B)$809.12
C)$820.34
D)$828.00

Question

Quizplus · Accepted Answer

First, let's calculate the interest on the loan for 6 months:

I = P * r * t
I = 4000 * 0.07 * 0.5
I = $140

Now, let's set up an equation based on the payments:

2X + 2X + X + 4000 = 4000 + 140

Simplifying:

5X = 140
X = $28

Therefore, the first payment is X = $28, the second payment is 2X = $56, and the third payment is 2X = $56.

To verify, let's calculate the total amount paid:

$28 + $56 + $56 = $140 + $4000 = $4140

And the interest earned:

$4140 - $4000 = $140

So everything checks out. Therefore, the answer is C.

A Person Borrows $4000 at a Simple Interest Rate of 7%.They