Elsa took out a 2-year loan to buy a car at a 6% simple interest rate. If she has to pay $264 in interest, how much principal did she borrow?

Answer 1

To find the principal amount we can use the formula I=P times R times T where I is the interest, P is the principal amount, r is the interest rate in decimal form, and t is the time the money is invested for (in years). Therefore, this simplifies to 264=.06 P times 2. This makes .06P equal to 132. Therefore, the answer is 2,200 dollars. She borrowed $2,200 worth of principal.