This mathematics problem involves applying core mathematical principles and formulas. Below you will find a complete step-by-step solution with detailed explanations for each step, helping you understand not just the answer but the method behind it.
ScanSolve AI Answer
Step 1: Identify the given information. The interest rate (R) is 20\% per annum, which is 0.20 in decimal form. The time period (T) is 1 year. The total amount paid (A) after one year is Kshs 850,000. We need to find the principal amount borrowed (P). Step 2: Use the formula for the total amount with simple interest. The formula for the total amount (A) after a certain time with simple interest is: A = P(1 + RT) Where: A = Total amount P = Principal amount (initial amount borrowed) R = Annual interest rate (as a decimal) T = Time in years Step 3: Substitute the given values into the formula. 850,000 = P(1 + 0.20 × 1) 850,000 = P(1 + 0.20) 850,000 = P(1.20) Step 4: Solve for P. To find P, divide the total amount by 1.20: P = (850,000)/(1.20) P = 708,333.333... Step 5: Round the answer to two decimal places for currency. P ≈ 708,333.33 The man borrowed Kshs 708,333.33. The amount borrowed was Kshs 708,333.33.