To help his sister, Lydia, pay for college, Jason offered her a loan at a simple annual interest rate of 2%. At the end of 4 years, Lydia paid off the loan, and Jason received $80 in interest. How much money did Jason loan his sister?

Question

jim_thompson5910 · Answer

Use the formula

I = P*r*t


I = interest
P = principal (ie amount loaned)
r = interest rate
t = time in years

anonymous · Answer

how do u get the answer.

jim_thompson5910 · Answer

In your case, 

I = 80
P = unknown (leave it as P for now)
r = 0.02
t = 4

jim_thompson5910 · Answer

0.02 = 2% since

2% = 2/100 = 0.02

jim_thompson5910 · Answer

plug those values in and solve for P

jim_thompson5910 · Answer

I = P*r*t

80 = P*0.02*4

P = ???

jim_thompson5910 · Answer

what is 0.02*4 equal to

anonymous · Answer

0.08

jim_thompson5910 · Answer

we now have 

80 = P*0.08

jim_thompson5910 · Answer

we isolate P by undoing that multiplication of 0.08

jim_thompson5910 · Answer

so we divide both sides by 0.08 to isolate P

anonymous · Answer

how do u  do that

jim_thompson5910 · Answer

80/0.08 = ???

anonymous · Answer

omg thanks

anonymous · Answer

When Janette was 5 years old, her grandmother deposited $2500 into a savings account for her. The account pays a simple annual interest rate of 4%. What will the balance be when Janette turns 15 years old?

jim_thompson5910 · Answer

same idea, just slightly different

jim_thompson5910 · Answer

you use I = P*r*t

in this case, P = 2500, r = 0.04, t = 15

calculate the interest earned and add that to 2500