Simple Interest
Math MCQs

Question :    If Donald paid $4860 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.

Correct Answer  $4500

Solution & Explanation

Solution

Given,

Amount (A) = $4860

Rate of Simple Interest (R) = 2%

Time (T) = 4 years

Thus, Principal (P) = ?

Method (1) Using Formula

Calculation of the Principal using forumula when Amount, Time and Rate of Simple Interest are given

Formula to find the Principal (P)

Amount (A) = Principal (P) + Principal (P) × Rate (R) × Time (T)

⇒ Amount (A) = Principal (P) [1 + Rate (R) × Time (T)]

⇒ A = P (1 + RT)

Using the formula to find the Amount (A), the fourth can be calculated if any three of A, P, R, and T are given

In the given question, we need to find the Principal (P)

Therefore, by substituting, Amount, Rate, and Time, in the formula A = P (1 + RT) we get

$4860 = P (1 + 2% × 4)

⇒ $4860 = P (1 + ²/₁₀₀ × 4)

⇒ $4860 = P (1 + ^{2 × 4}/₁₀₀)

⇒ $4860 = P (1 + ⁸/₁₀₀)

⇒ $4860 = P (^{100 + 8}/₁₀₀)

⇒ $4860 = P × ¹⁰⁸/₁₀₀

⇒ P × ¹⁰⁸/₁₀₀ = $4860

⇒ P = ⁴⁸⁶⁰/_¹⁰⁸/100

⇒ P = 4860 × ¹⁰⁰/₁₀₈

⇒ P = ^{4860 × 100}/₁₀₈

⇒ P = ⁴⁸⁶⁰⁰⁰/₁₀₈

⇒ P = $4500

Thus, the sum borrowed (P) = $4500 Answer

Method (1) Using Unitary Method

Calculation of the Principal using unitary method when Amount, Time and Rate of Simple Interest are given

Calculation of the Simple Interest

Let, the principal = 100

Here, since rate of simple interest = 2% per annum

Thus, Interest = 2% of principal

⇒ Interest = 2% of 100 = 2

Thus, Simple Interest for 1 year = 2

Calculation of the Amount

Since, in the question, time = 4 years

So, we need to calculate the simple interest for the given time period, which is 4 years

Thus, Simple Interest for 4 years = 4 × Simple Interest for 1 year

= 4 × 2 = 8

Thus, simple interest for 4 years = 8

Thus, Amount (A) = Principal + Interest

⇒ Amount = 100 + 8 = 108

Calculation of the Principal

Now,

∵ If the Amount is 108, then the Principal = 100

∴ If the Amount is 1, then the Principal = ¹⁰⁰/₁₀₈

∴ If the Amount is 4860, then the Principal = ¹⁰⁰/₁₀₈ × 4860

= ^{100 × 4860}/₁₀₈

= ⁴⁸⁶⁰⁰⁰/₁₀₈

= 4500

Thus, Principal = $4500

Thus, the sum borrowed = $4500 Answer

Similar Questions

(1) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 3% simple interest.

(2) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 9% simple interest?

(3) In how much time a principal of $3100 will amount to $3379 at a simple interest of 3% per annum?

(4) Calculate the amount due if Patricia borrowed a sum of $3150 at 3% simple interest for 4 years.

(5) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 5% simple interest?

(6) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $8378 to clear the loan, then find the time period of the loan.

(7) Thomas took a loan of $5600 at the rate of 10% simple interest per annum. If he paid an amount of $8960 to clear the loan, then find the time period of the loan.

(8) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 7% simple interest?

(9) Find the amount to be paid if John borrowed a sum of $5200 at 4% simple interest for 8 years.

(10) Calculate the amount due if Michael borrowed a sum of $3300 at 6% simple interest for 4 years.