Let x be the original amount Emma borrowed.
The total amount paid back after 8 years is x + 5000.
The total interest paid over 8 years is 5000.
The total amount paid back after 8 years with interest is x + 5000.
The formula for calculating the total amount paid back after paying off a loan is:
Total amount = Principal + Interest
x + 5000 = x + 0.04x
5000 = 0.04x
x = 5000 / 0.04
x = $125,000
Emma originally borrowed $125,000 to pay for school.
Emma took out student loans with a 4% interest rate. She pays them off in 8 years and paid $5,000 in interest. How much did she originally borrow to pay for school?
1 answer