Simple Interest
Math MCQs

Question :    How much loan did Jason borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8470 to clear it?

Correct Answer  $7700

Solution & Explanation

Solution

Given,

Amount (A) = $8470

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

$8470 = P (1 + 2% × 5)

⇒ $8470 = P (1 + ²/₁₀₀ × 5)

⇒ $8470 = P (1 + ^{2 × 5}/₁₀₀)

⇒ $8470 = P (1 + ¹⁰/₁₀₀)

⇒ $8470 = P (^{100 + 10}/₁₀₀)

⇒ $8470 = P × ¹¹⁰/₁₀₀

⇒ P × ¹¹⁰/₁₀₀ = $8470

⇒ P = ⁸⁴⁷⁰/_¹¹⁰/100

⇒ P = 8470 × ¹⁰⁰/₁₁₀

⇒ P = ^{8470 × 100}/₁₁₀

⇒ P = ⁸⁴⁷⁰⁰⁰/₁₁₀

⇒ P = $7700

Thus, the sum borrowed (P) = $7700 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 8470, then the Principal = ¹⁰⁰/₁₁₀ × 8470

= ^{100 × 8470}/₁₁₀

= ⁸⁴⁷⁰⁰⁰/₁₁₀

= 7700

Thus, Principal = $7700

Thus, the sum borrowed = $7700 Answer

Similar Questions

(1) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 2% simple interest?

(2) Calculate the amount due if Robert borrowed a sum of $3100 at 5% simple interest for 4 years.

(3) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $11970 to clear the loan, then find the time period of the loan.

(4) Calculate the amount due if Barbara borrowed a sum of $3550 at 7% simple interest for 4 years.

(5) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 10% simple interest?

(6) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $11946 to clear the loan, then find the time period of the loan.

(7) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 9% simple interest.

(8) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 6% simple interest.

(9) Calculate the amount due if Susan borrowed a sum of $3650 at 8% simple interest for 3 years.

(10) 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.