SOLUTION: Jill gets a loan at 8% simple interest for 5 years, The loan accumulates $400 in interest, what was the principle amount of the loan?

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Question 433890: Jill gets a loan at 8% simple interest for 5 years, The loan accumulates $400 in interest, what was the principle amount of the loan?
Answer by Sarpi(32) About Me  (Show Source):
You can put this solution on YOUR website!
A simple interest loan;
Time(T)= 5yrs, Rate(R)= 8%, Interest(I)= $400, Principal(P)= ?
P=%28I%2A100%29%2F%28R%2AT%29 derived from the Simple Interest (SI) formula; I=%28P%2AR%2AT%29%2F100.
Thus P=%28400%2A100%29%2F%288%2A5%29 which is equal to 1000.
Therefore, the principal is $1,000.

Checking with the SI formula; I=%28P%2AR%2AT%29%2F100.
I=%281000%2A8%2A5%29%2F100 which is exactly equal to the interest in question ($400).