Simple Interest
Math MCQs

Question :    How much loan did Robert borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6120 to clear it?

Correct Answer  $5100

Solution & Explanation

Solution

Given,

Amount (A) = $6120

Rate of Simple Interest (R) = 4%

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

$6120 = P (1 + 4% × 5)

⇒ $6120 = P (1 + ⁴/₁₀₀ × 5)

⇒ $6120 = P (1 + ^{4 × 5}/₁₀₀)

⇒ $6120 = P (1 + ²⁰/₁₀₀)

⇒ $6120 = P (^{100 + 20}/₁₀₀)

⇒ $6120 = P × ¹²⁰/₁₀₀

⇒ P × ¹²⁰/₁₀₀ = $6120

⇒ P = ⁶¹²⁰/_¹²⁰/100

⇒ P = 6120 × ¹⁰⁰/₁₂₀

⇒ P = ^{6120 × 100}/₁₂₀

⇒ P = ⁶¹²⁰⁰⁰/₁₂₀

⇒ P = $5100

Thus, the sum borrowed (P) = $5100 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 = 4% per annum

Thus, Interest = 4% of principal

⇒ Interest = 4% of 100 = 4

Thus, Simple Interest for 1 year = 4

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 × 4 = 20

Thus, simple interest for 5 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 6120, then the Principal = ¹⁰⁰/₁₂₀ × 6120

= ^{100 × 6120}/₁₂₀

= ⁶¹²⁰⁰⁰/₁₂₀

= 5100

Thus, Principal = $5100

Thus, the sum borrowed = $5100 Answer

Similar Questions

(1) Calculate the amount due if Charles borrowed a sum of $3900 at 4% simple interest for 3 years.

(2) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 4% simple interest?

(3) Richard took a loan of $5200 at the rate of 9% simple interest per annum. If he paid an amount of $9880 to clear the loan, then find the time period of the loan.

(4) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 10% simple interest.

(5) Jennifer had to pay $3640 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.

(6) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $8772 to clear the loan, then find the time period of the loan.

(7) Calculate the amount due if Sarah borrowed a sum of $3850 at 6% simple interest for 3 years.

(8) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 6% simple interest.

(9) Find the amount to be paid if Mary borrowed a sum of $5050 at 10% simple interest for 8 years.

(10) If John borrowed $3200 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.