Given that Mike borrowed an amount for 2 years at 2% simple interest, and paid back a total of $3952.
To Determine: The original money he borrowed
Solution:
The formula to find the amount for simple interest is
[tex]A=P(1+rt)[/tex]Where:
A is the Amount paid back
r is the rate
t is the time
Given that
[tex]\begin{gathered} A=3952 \\ r=\frac{2}{100}=0.02 \\ t=2 \end{gathered}[/tex]Substitute the given into the formula
[tex]\begin{gathered} A=P(1+rt) \\ 3952=P(1+0.02\times2) \\ 3952=P(1+0.04) \\ 3952=P(1.04) \\ 3952=1.04P \\ P=\frac{3952}{1.04} \\ P=3,800 \end{gathered}[/tex]Hence, the Mike originally borrow $3,800
