Using simple interest, it is found that the principal loan amount was of $156,491.6.
The amount of money after t years in simple interest is modeled by:
[tex]A(t) = A(0)(1 + rt)[/tex]
In which:
- A(0) is the initial amount, which is also called principal.
- r is the interest rate, as a decimal.
In this problem, she paid $984 monthly for 22 years, hence:
[tex]t = 22, A(t) = 984(22)(12) = 259776[/tex]
Interest rate of 3%, hence [tex]r = 0.03[/tex]
Then:
[tex]A(t) = A(0)(1 + rt)[/tex]
[tex]259776 = A(0)[1 + 0.03(22)][/tex]
[tex]A(0) = \frac{259776}{1 + 0.03(22)}[/tex]
[tex]A(0) = 156491.6[/tex]
The principal loan amount was of $156,491.6.
A similar problem is given at https://brainly.com/question/13176347
