SOLUTION: Margaret's car loan statement said she would pay $6,568.80 in simple interest for a five-year loan at 8.4%. How much, in dollars, did Margaret borrow to buy the car?

Question 1135128: Margaret's car loan statement said she would pay $6,568.80 in simple interest for a five-year loan at 8.4%. How much, in dollars, did Margaret borrow to buy the car?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the formula for simple interest is i = p * r * t.

i is the interest.
p is the principal.
r is the interest rate per time period.
n is the number of time periods.

in your problem:

i = 6568.80
n = 5
r = 8.4% / 100 = .084

the time period is years.

plug those values into the formula to get 6568.80 = p * .084 * 5

solve for p to get p = 6568.80 / (.084 * 5) = 15640.

she borrowed 15,640 dollars at 8.4% simple interest.

test your formula with this value to confirm the solution is good.

15640 * .084 * 5 = 6568.8, confirming the solution is good.

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