Answered

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Linda Davis agreed to lend money to Alex Luciano at a special interest rate of 7% per year, on the condition that he borrow enough that would pay her $500 in interest over a four-year period. What was the minimum amount Alex could borrow?

Sagot :

It is given that,

[tex]\begin{gathered} Rate(R)\text{ = 7\%} \\ I\text{ = \% 500} \\ T\text{ =3 years} \end{gathered}[/tex]

Interest is given by the formula,

[tex]I\text{ = }\frac{PRT}{100}[/tex]

Substituting the value in the formula,

[tex]\begin{gathered} 500\text{ = }\frac{P\times7\times4}{100} \\ 50000\text{ = 28P} \\ P\text{ = }\frac{50000}{28} \\ P\text{ = 1785.71 } \end{gathered}[/tex]

Thus the minimum amount to be borrowed is $ 1785.71.

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