Problem

Michelle borrows a total of $8000 in student loans from two lenders. One charges 3.7% simple interest and the other charges 6.2% simple interest. She is not required to pay off the principal or interest for 3yr. However, at the end of 3yr, she will owe a total of $1113 for the interest from both loans. How much did she borrow from each lender?

Answer

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Answer

So, Michelle borrowed $5000 from the lender who charges 3.7% simple interest and $3000 from the lender who charges 6.2% simple interest.

Steps

Step 1 :Let's denote the amount borrowed from the lender who charges 3.7% simple interest as x and the amount borrowed from the lender who charges 6.2% simple interest as y.

Step 2 :From the problem, we know that the total amount borrowed is $8000, so we have the equation x+y=8000.

Step 3 :Also, the total interest owed after 3 years is $1113. Since the interest is calculated using the formula Interest=Principal×Rate×Time, we have the equation 0.037x3+0.062y3=1113.

Step 4 :We can solve this system of equations using substitution or elimination method. Let's use the substitution method. We can express y as 8000x from the first equation and substitute it into the second equation.

Step 5 :Substituting y into the second equation, we get 0.037x3+0.062(8000x)3=1113.

Step 6 :Solving this equation for x, we get x=5000.

Step 7 :Substituting x=5000 back into the first equation, we get 5000+y=8000, which gives y=3000.

Step 8 :So, Michelle borrowed $5000 from the lender who charges 3.7% simple interest and $3000 from the lender who charges 6.2% simple interest.

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