Questions: State Bank made a loan at 12% interest for 360 days. If the amount of interest was 934.20, use the ordinary interest method to find the amount of principal borrowed. (Round to the nearest whole dollar)

Solution Steps

To find the principal amount borrowed using the ordinary interest method, we can use the formula for simple interest: \( I = P \times r \times t \), where \( I \) is the interest, \( P \) is the principal, \( r \) is the rate of interest per year, and \( t \) is the time in years. We need to solve for \( P \) given \( I = 934.20 \), \( r = 0.12 \), and \( t = \frac{360}{360} = 1 \) year.

We are given the following values:

• Interest \( I = 934.20 \)
• Rate \( r = 0.12 \)
• Time \( t = \frac{360}{360} = 1 \) year

The formula for simple interest is given by: \[ I = P \times r \times t \] We need to solve for the principal \( P \): \[ P = \frac{I}{r \times t} \]

Substituting the known values into the formula: \[ P = \frac{934.20}{0.12 \times 1} \]

Calculating the principal: \[ P = \frac{934.20}{0.12} = 7785 \]

Final Answer