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?

Question

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

Answer 1

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.