Answer:
$500
Step-by-step explanation:
Given that :
Monthly payment made = $46.25
Period = 12 months
Total amount repaid = $(46.25 * 12) = $555
Hence, the entire amount paid back = $555
Interest rate = 11%
Using the simple interest relation:
A = P(1 + rt)
A = total amount repaid
r = interest rate
t = period
P = principal (amount borrowed)
555 = P(1 + (0.11*1))
555 = P(1 + 0.11)
555 = P(1.11)
555 = 1.11P
P = 555 / 1.11
P = $500
Amount borrowed = $500
