Suppose that you took out a loan at 12% interest for 200 days. If the amount of interest was $690.41, use the exact interest method to find the amount of principal you borrowed. (Round to the nearest whole dollar amount)
A) $10,356.00
B) $10,500.00
C) $4,540.00
D) $45.00

Question

Quizplus · Accepted Answer

The exact interest method calculates interest using a 365-day year. The formula for interest is $I = P \times r \times \frac{t}{365}$, where $I$ is the interest, $P$ is the principal, $r$ is the annual interest rate, and $t$ is the time in days. Rearranging the formula to solve for $P$, we get $P = \frac{I}{r \times \frac{t}{365}}$. Plugging in the given values ($I = 690.41$, $r = 0.12$, $t = 200$), we find $P = \frac{690.41}{0.12 \times \frac{200}{365}}$, which calculates to approximately $10,500.00.

Suppose That You Took Out a Loan at 12% Interest