John runs a florist shop in a small arkansas town and had to borrow $170,000 to start up the shop. He was able to borrow some from the state business development office at 4% but the rest he had to borrow from a friend who charged him 8%. The first year John paid $9800 in interest. How much did he borrow from his friend?
If he borrowed $x from his friend at 8%, then the rest (170000-x) is at 4%. So, now you have
.08x + .04(170000-x) = 9800
x = 75,000
To determine how much John borrowed from his friend, let's consider the interest paid on the loan from the state business development office and the interest paid on the loan from his friend. Since the total interest paid in the first year was $9800, we can set up an equation to solve the problem.
Let's assume John borrowed x amount of money from his friend at an interest rate of 8%. Since the amount borrowed from the state business development office is $170,000 - x (the remaining amount he borrowed), and the interest rate on this loan is 4%, we can write the equation:
0.08x + 0.04($170,000 - x) = $9800
Simplifying the equation:
0.08x + 0.04($170,000) - 0.04x = $9800
0.08x - 0.04x + $6,800 = $9800
0.04x + $6,800 = $9800
Subtracting $6,800 from both sides:
0.04x = $9800 - $6,800
0.04x = $2,000
Dividing both sides by 0.04:
x = $2,000 / 0.04
x ≈ $50,000
Therefore, John borrowed approximately $50,000 from his friend.