Question

Mia agrees to borrow a 3-year loan with 4% simple interest to buy a motorcycle. Part A If Mia will pay a total of $444 in interest, how much money did she initially borrow? Enter your answer in the box. $ Part B How much interest would Mia pay if the simple interest rate were 5%? Enter your answer in the box. $

Answer 1

We have been given that Mia agrees to borrow a 3-year loan with 4% simple interest to buy a motorcycle.

A. Mia paid a total of $444 in interest. We are asked to find the amount of money borrowed by Mia initially.

We will use simple interest formula to solve our given problem.

$I=Prt$, where,

I = Amount of interest,

P =  Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

$4\%=\frac{4}{100}=0.04$

$444=P\cdot 0.04\cdot 3$

$444=0.12P$

$\frac{444}{0.12}=\frac{0.12P}{0.12}$

$P=3700$

Therefore, Mia initially borrowed $3700.

B. For part B we need to find amount interest paid by Mia at an interest rate of 5%.

$5\%=\frac{5}{100}=0.05$

$I=3700\cdot 0.05\cdot 3$

$I=3700\cdot 0.15$

$I=555$

Therefore, Mia will pay an amount of $55 in interest.