Scott takes gets a student loan to go to college after high school. If he pays $750 in interest at a rate of 3% for 10 years, how much must the loan have been for originally?
HINT: Use the answer choices to figure out which starting amount will give you the interest of $750.
Scott takes gets a student loan to go to college after high school. If he pays $750 in interest at a rate of 3% for 10 years, how much must the loan have been for originally?
HINT: Use the answer choices to figure out which starting amount will give you the interest of $750.
3,000
2,500
7,500
2,000
To calculate the original amount of the loan, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Given that Scott pays $750 in interest, the rate is 3%, and the time is 10 years. Let's use the answer choices to see which one gives an interest of $750:
1. $3,000:
Interest = $3,000 x 0.03 x 10 = $900
2. $2,500:
Interest = $2,500 x 0.03 x 10 = $750
3. $7,500:
Interest = $7,500 x 0.03 x 10 = $2,250
4. $2,000:
Interest = $2,000 x 0.03 x 10 = $600
Therefore, the loan must have been originally for $2,500 for Scott to pay $750 in interest at a rate of 3% for 10 years.