Question 203980: Hello:
My question is the following:
If the quarterly interest at 10.5 percent is $3,150 then what is the principal amount of the loan?
Thanks in advance for your help.
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! i can assume the following but not sure this is what you want.
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if the quarterly interest on the loan is $3,150 at 10.5% interest per quarter, then the principal on the loan would be $3,150 / .105 = $30,000.
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if the interest per quarter is always $3,150 then you are stating that the loan is using simple interest and not compound interest. this means that the interest earned on the loan is not re-invested in the principal so the principal remains the same throughout the loan and the interest paid each quarter remains the same throughout the loan as well.
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compound interest assumes the interest is added to the principal each quarter (re-invested) so the principal would change every quarter and the interest earned would also change every quarter even though the payment might remain the same. perhaps you're not there yet. at any rate, i assumed simple interest because of the way the problem was stated. if there's something i missed, feel free to ask further questions.
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I would say your answer is $30,000 principal assuming simple interest.
$3,150 / .105 = $30,000 (quarterly interest)
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