Simple Interest
Math MCQs

Question :    How much loan did Kenneth borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7700 to clear it?

Correct Answer  $7000

Solution & Explanation

Solution

Given,

Amount (A) = $7700

Rate of Simple Interest (R) = 2%

Time (T) = 5 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

$7700 = P (1 + 2% × 5)

⇒ $7700 = P (1 + ²/₁₀₀ × 5)

⇒ $7700 = P (1 + ^{2 × 5}/₁₀₀)

⇒ $7700 = P (1 + ¹⁰/₁₀₀)

⇒ $7700 = P (^{100 + 10}/₁₀₀)

⇒ $7700 = P × ¹¹⁰/₁₀₀

⇒ P × ¹¹⁰/₁₀₀ = $7700

⇒ P = ⁷⁷⁰⁰/_¹¹⁰/100

⇒ P = 7700 × ¹⁰⁰/₁₁₀

⇒ P = ^{7700 × 100}/₁₁₀

⇒ P = ⁷⁷⁰⁰⁰⁰/₁₁₀

⇒ P = $7000

Thus, the sum borrowed (P) = $7000 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 = 5 years

So, we need to calculate the simple interest for the given time period, which is 5 years

Thus, Simple Interest for 5 years = 5 × Simple Interest for 1 year

= 5 × 2 = 10

Thus, simple interest for 5 years = 10

Thus, Amount (A) = Principal + Interest

⇒ Amount = 100 + 10 = 110

Calculation of the Principal

Now,

∵ If the Amount is 110, then the Principal = 100

∴ If the Amount is 1, then the Principal = ¹⁰⁰/₁₁₀

∴ If the Amount is 7700, then the Principal = ¹⁰⁰/₁₁₀ × 7700

= ^{100 × 7700}/₁₁₀

= ⁷⁷⁰⁰⁰⁰/₁₁₀

= 7000

Thus, Principal = $7000

Thus, the sum borrowed = $7000 Answer

Similar Questions

(1) Find the amount to be paid if Thomas borrowed a sum of $5800 at 5% simple interest for 7 years.

(2) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 9% simple interest.

(3) Sarah took a loan of $5700 at the rate of 8% simple interest per annum. If he paid an amount of $8436 to clear the loan, then find the time period of the loan.

(4) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 3% simple interest.

(5) Calculate the amount due if Patricia borrowed a sum of $3150 at 7% simple interest for 3 years.

(6) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 6% simple interest?

(7) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $12420 to clear the loan, then find the time period of the loan.

(8) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 6% simple interest.

(9) Calculate the amount due if James borrowed a sum of $3000 at 10% simple interest for 4 years.

(10) In how much time a principal of $3000 will amount to $3750 at a simple interest of 5% per annum?