State Bank made a loan at 12% interest for 360 days. If the amount of interest was $934.20, use the ordinary interest method to find the amount of principal borrowed. (Round to the nearest whole dollar)
A) $9,646
B) $8,830
C) $7,785
D) $7,683

Question

Quizplus · Accepted Answer

Using the ordinary interest method, Interest = Principal x Rate x Time. Rearranging gives Principal = Interest / (Rate x Time). Here, Time is 360/360 = 1 year, Rate is 12% or 0.12, and Interest is $934.20. So, Principal = $934.20 / (0.12 x 1) = $7,785.

State Bank Made a Loan at 12% Interest for 360