Eric borrowed a total of $4000 from two student loans. One loan charged 5% simple interest and the other charged 4.5% simple interest, both payable af

floymdiT

floymdiT

Answered question

2021-06-17

Eric borrowed a total of $4000 from two student loans. One loan charged 5% simple interest and the other charged 4.5% simple interest, both payable after graduation. If the interest he owed after 3 years was $547.50, determine the amount of principal for each loan.

Answer & Explanation

Jaylen Fountain

Jaylen Fountain

Skilled2021-06-19Added 169 answers

Heres
Ian Adams

Ian Adams

Skilled2021-08-04Added 163 answers

If x is invested at 5%, then 4000−x is invested at 4.5%.
The simple interest earned in 3 years is $547.50 so each year, the simple interest earned is $547.50/3=182.50 so we can write:
0.05x+0.045(4000x)=182.50
Solve for x:
0.05x+1800.045x=182.50
0.005x=2.50
x=2.500.005
x=500
So, the Eric loaned $500 at 5% and $3,500 at 4.5%.

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