Question

Frank paid the interest on the loan he bought 10 years ago is $\$4500$ at a simple interest rate of 15%. What is the amount he borrowed?

• A. $\$1500$
• B. $\$3000$
• C. $\$5000$
• D. $\$6000$

Answer 1

The correct option is B $\$3000$

Let, P = Principal or starting amount

Given, R = Rate of interest = 15%
T = Time period = 10 years
and Simple Interest $=\$4500$

$\because \text{Simple Interest}=\frac{PRT}{100}$
$\Rightarrow 4500=\frac{P\times 15\times 10}{100}$

Cross multiplying, we get
$4500\times 100=P\times 15\times 10$
$\Rightarrow 450000=P\times 150$

Dividing both the sides by $150,$ we get
$\frac{450000}{150}=P$

Simplify and cancel the common factors, we get
$P=\frac{150\times 3\times 1000}{150}$
$\Rightarrow P=3\times 1000$
$\Rightarrow P=3000$

Hence, Frank borrowed $\$3000$ from the bank.