Problema Solution
Compute the principal for the following loan. Round to the nearest cent, 2 places after decimal. Interest $5,900, Rate 10 1/2%, Time 10 months
Answer provided by our tutors
Firstly, the time is given in months i.e 10 months.
So, while computing the principal, we will convert the months into year
10 months= (10/12) year
Now,
Interest= Principal * Rate * Time ------ Simple Interest Formula
5,900= Principal * 10.5 * (10/12)
Principal =5,900/ (10.5 * (10/12))
Principal = 5900/(10.5 * 0.833)
Principal = 5900/ 8.75
Principal = 674.28
Thus, the Principal for loan is $ 674.28.