Simple Interest
Math MCQs

Question :    How much loan did William borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6325 to clear it?

Correct Answer  $5500

Solution & Explanation

Solution

Given,

Amount (A) = $6325

Rate of Simple Interest (R) = 3%

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

$6325 = P (1 + 3% × 5)

⇒ $6325 = P (1 + ³/₁₀₀ × 5)

⇒ $6325 = P (1 + ^{3 × 5}/₁₀₀)

⇒ $6325 = P (1 + ¹⁵/₁₀₀)

⇒ $6325 = P (^{100 + 15}/₁₀₀)

⇒ $6325 = P × ¹¹⁵/₁₀₀

⇒ P × ¹¹⁵/₁₀₀ = $6325

⇒ P = ⁶³²⁵/_¹¹⁵/100

⇒ P = 6325 × ¹⁰⁰/₁₁₅

⇒ P = ^{6325 × 100}/₁₁₅

⇒ P = ⁶³²⁵⁰⁰/₁₁₅

⇒ P = $5500

Thus, the sum borrowed (P) = $5500 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 = 3% per annum

Thus, Interest = 3% of principal

⇒ Interest = 3% of 100 = 3

Thus, Simple Interest for 1 year = 3

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 × 3 = 15

Thus, simple interest for 5 years = 15

Thus, Amount (A) = Principal + Interest

⇒ Amount = 100 + 15 = 115

Calculation of the Principal

Now,

∵ If the Amount is 115, then the Principal = 100

∴ If the Amount is 1, then the Principal = ¹⁰⁰/₁₁₅

∴ If the Amount is 6325, then the Principal = ¹⁰⁰/₁₁₅ × 6325

= ^{100 × 6325}/₁₁₅

= ⁶³²⁵⁰⁰/₁₁₅

= 5500

Thus, Principal = $5500

Thus, the sum borrowed = $5500 Answer

Similar Questions

(1) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $13300 to clear the loan, then find the time period of the loan.

(2) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 7% simple interest?

(3) Find the amount to be paid if Joseph borrowed a sum of $5700 at 8% simple interest for 7 years.

(4) Calculate the amount due if James borrowed a sum of $3000 at 8% simple interest for 3 years.

(5) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 7% simple interest for 8 years.

(6) How much loan did Joseph borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6270 to clear it?

(7) What amount does John have to pay after 5 years if he takes a loan of $3200 at 6% simple interest?

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

(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.

(10) 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.