Simple Interest
Math MCQs

Question :    If Michelle paid $5940 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.

Correct Answer  $4950

Solution & Explanation

Solution

Given,

Amount (A) = $5940

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

$5940 = P (1 + 5% × 4)

⇒ $5940 = P (1 + ⁵/₁₀₀ × 4)

⇒ $5940 = P (1 + ^{5 × 4}/₁₀₀)

⇒ $5940 = P (1 + ²⁰/₁₀₀)

⇒ $5940 = P (^{100 + 20}/₁₀₀)

⇒ $5940 = P × ¹²⁰/₁₀₀

⇒ P × ¹²⁰/₁₀₀ = $5940

⇒ P = ⁵⁹⁴⁰/_¹²⁰/100

⇒ P = 5940 × ¹⁰⁰/₁₂₀

⇒ P = ^{5940 × 100}/₁₂₀

⇒ P = ⁵⁹⁴⁰⁰⁰/₁₂₀

⇒ P = $4950

Thus, the sum borrowed (P) = $4950 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 5940, then the Principal = ¹⁰⁰/₁₂₀ × 5940

= ^{100 × 5940}/₁₂₀

= ⁵⁹⁴⁰⁰⁰/₁₂₀

= 4950

Thus, Principal = $4950

Thus, the sum borrowed = $4950 Answer

Similar Questions

(1) Sarah had to pay $4081 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.

(2) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 3% simple interest.

(3) Find the amount to be paid if Charles borrowed a sum of $5900 at 2% simple interest for 7 years.

(4) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6800 to clear the loan, then find the time period of the loan.

(5) Calculate the amount due if Joseph borrowed a sum of $3700 at 9% simple interest for 4 years.

(6) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $7172 to clear the loan, then find the time period of the loan.

(7) Christopher had to pay $4600 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.

(8) If David paid $3672 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.

(9) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 8% simple interest.

(10) Find the amount to be paid if Joseph borrowed a sum of $5700 at 7% simple interest for 7 years.