Problema Solution
Suppose that you took out a loan at 10% interest for 278 days. If the amount of interest was $761.64, use the exact interest method to find the amount of principal you borrowed. (Round to the nearest whole dollar)
Answer provided by our tutors
For the exact interest method, the interest paid is based on the basis of a 365-day per year as opposed to a 360-day basis (ordinary interest).
P = the principal
t = 278 days
r = 0.10 or 10%
I = $761.64
I = P*r*t/365
P = 365I/(rt)
P = 365*761.64/(0.10*278)
P = $1,000
The amount of the principal borrowed was $1,000.