Simple Interest
Math MCQs

Question :    How much loan did Ryan borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8690 to clear it?

Correct Answer  $7900

Solution & Explanation

Solution

Given,

Amount (A) = $8690

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

$8690 = P (1 + 2% × 5)

⇒ $8690 = P (1 + ²/₁₀₀ × 5)

⇒ $8690 = P (1 + ^{2 × 5}/₁₀₀)

⇒ $8690 = P (1 + ¹⁰/₁₀₀)

⇒ $8690 = P (^{100 + 10}/₁₀₀)

⇒ $8690 = P × ¹¹⁰/₁₀₀

⇒ P × ¹¹⁰/₁₀₀ = $8690

⇒ P = ⁸⁶⁹⁰/_¹¹⁰/100

⇒ P = 8690 × ¹⁰⁰/₁₁₀

⇒ P = ^{8690 × 100}/₁₁₀

⇒ P = ⁸⁶⁹⁰⁰⁰/₁₁₀

⇒ P = $7900

Thus, the sum borrowed (P) = $7900 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 8690, then the Principal = ¹⁰⁰/₁₁₀ × 8690

= ^{100 × 8690}/₁₁₀

= ⁸⁶⁹⁰⁰⁰/₁₁₀

= 7900

Thus, Principal = $7900

Thus, the sum borrowed = $7900 Answer

Similar Questions

(1) Find the amount to be paid if Michael borrowed a sum of $5300 at 9% simple interest for 7 years.

(2) Find the amount to be paid if Christopher borrowed a sum of $6000 at 6% simple interest for 8 years.

(3) In how much time a principal of $3150 will amount to $3339 at a simple interest of 3% per annum?

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

(5) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 3% simple interest.

(6) What amount does John have to pay after 6 years if he takes a loan of $3200 at 2% simple interest?

(7) If Joshua paid $5488 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.

(8) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 9% simple interest.

(9) What amount will be due after 2 years if James borrowed a sum of $3000 at a 4% simple interest?

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