A business owner

Question

A business owner takes out a 4-month loan
at a 6% per year simple interest rate. At
the end of the 4-month loan period, the
interest owed is $194. What was the principal
amount borrowed?

Answer 1

6%/3 = 2% = 0.02 <--- interest hits every four months. That's 3 times annually.

 

2% of P = 194 where P is the principal amount

 

P = 194/2%  = 194/ 0.02 = 9700