Holly loaned funds at 12% for 30 days and earned $500 in interest. How much is the principal on this loan (use ordinary interest)?

We can calculate the principal by using the formula for ordinary interest, which is:

\[
I = P \times r \times t
\]

Where:
- $ I $ is the interest earned,
- $ P $ is the principal (the amount of money loaned),
- $ r $ is the annual interest rate (as a decimal),
- $ t $ is the time the loan is in effect (in years).

### Given:
- $ I = 500 $ (interest earned),
- $ r = 12\% = 0.12 $,
- $ t = \frac{30}{360} = 0.0833 $ years (since ordinary interest assumes 360 days in a year).

Now, rearrange the formula to solve for $ P $:

\[
P = \frac{I}{r \times t}
\]

Substituting the values:

\[
P = \frac{500}{0.12 \times 0.0833}
\]

Let me calculate this for you.The principal on the loan is approximately \$50,000.

Would you like further clarification on this calculation or details about ordinary interest? Here are five related questions to expand on this topic:

1. How would the principal change if the interest rate were lower, say 10%?
2. What is the difference between ordinary and exact interest calculations?
3. How do interest rates affect loan repayment schedules?
4. What happens if the loan period is extended to 60 days instead of 30?
5. How does compounding interest differ from simple interest in this context?

**Tip:** Always double-check the time period used in interest calculations, as it can vary depending on whether you use ordinary or exact interest.

Learn how to calculate the principal on a loan with 12% interest for 30 days, earning $500 in interest. This problem involves simple interest formulas and is suitable for high school students in Grades 10-12.

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