Miguel borrowed money from a credit union for 6 years and was charged simple interest at an annual rate of 6%

Finance Apr 02, 2021

Miguel borrowed money from a credit union for 6 years and was charged simple interest at an annual rate of 6%. The total interest that he paid was $72. How much money did he borrow?

Expert Solution

Given,

Interest rate (R) = 6%

Period of time (T) = 6 Years

Total interest earned (SI) = $72

SI = (P*T*R) /100

Here, We need principal (P)

So,

P = SI*100/(T*R)

= 72 * 100/(6*6%)

= 7200/36

= $200

Therefore Miguel borrowed $200.

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