Simple Interest
Math MCQs

Question :    If David paid $4080 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.

Correct Answer  $3400

Solution & Explanation

Solution

Given,

Amount (A) = $4080

Rate of Simple Interest (R) = 5%

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

$4080 = P (1 + 5% × 4)

⇒ $4080 = P (1 + ⁵/₁₀₀ × 4)

⇒ $4080 = P (1 + ^{5 × 4}/₁₀₀)

⇒ $4080 = P (1 + ²⁰/₁₀₀)

⇒ $4080 = P (^{100 + 20}/₁₀₀)

⇒ $4080 = P × ¹²⁰/₁₀₀

⇒ P × ¹²⁰/₁₀₀ = $4080

⇒ P = ⁴⁰⁸⁰/_¹²⁰/100

⇒ P = 4080 × ¹⁰⁰/₁₂₀

⇒ P = ^{4080 × 100}/₁₂₀

⇒ P = ⁴⁰⁸⁰⁰⁰/₁₂₀

⇒ P = $3400

Thus, the sum borrowed (P) = $3400 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 = 5% per annum

Thus, Interest = 5% of principal

⇒ Interest = 5% of 100 = 5

Thus, Simple Interest for 1 year = 5

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 × 5 = 20

Thus, simple interest for 4 years = 20

Thus, Amount (A) = Principal + Interest

⇒ Amount = 100 + 20 = 120

Calculation of the Principal

Now,

∵ If the Amount is 120, then the Principal = 100

∴ If the Amount is 1, then the Principal = ¹⁰⁰/₁₂₀

∴ If the Amount is 4080, then the Principal = ¹⁰⁰/₁₂₀ × 4080

= ^{100 × 4080}/₁₂₀

= ⁴⁰⁸⁰⁰⁰/₁₂₀

= 3400

Thus, Principal = $3400

Thus, the sum borrowed = $3400 Answer

Similar Questions

(1) What amount will be due after 2 years if John borrowed a sum of $3100 at a 5% simple interest?

(2) If Anthony paid $5160 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.

(3) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $7696 to clear the loan, then find the time period of the loan.

(4) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 6% simple interest?

(5) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 4% simple interest for 4 years.

(6) Michael had to pay $3696 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.

(7) Calculate the amount due if Karen borrowed a sum of $3950 at 4% simple interest for 3 years.

(8) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 4% simple interest?

(9) Find the amount to be paid if Barbara borrowed a sum of $5550 at 3% simple interest for 7 years.

(10) Calculate the amount due if Christopher borrowed a sum of $4000 at 3% simple interest for 4 years.