Simple Interest
Math MCQs

Question :    How much loan did Stephanie borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9060 to clear it?

Correct Answer  $7550

Solution & Explanation

Solution

Given,

Amount (A) = $9060

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

$9060 = P (1 + 4% × 5)

⇒ $9060 = P (1 + ⁴/₁₀₀ × 5)

⇒ $9060 = P (1 + ^{4 × 5}/₁₀₀)

⇒ $9060 = P (1 + ²⁰/₁₀₀)

⇒ $9060 = P (^{100 + 20}/₁₀₀)

⇒ $9060 = P × ¹²⁰/₁₀₀

⇒ P × ¹²⁰/₁₀₀ = $9060

⇒ P = ⁹⁰⁶⁰/_¹²⁰/100

⇒ P = 9060 × ¹⁰⁰/₁₂₀

⇒ P = ^{9060 × 100}/₁₂₀

⇒ P = ⁹⁰⁶⁰⁰⁰/₁₂₀

⇒ P = $7550

Thus, the sum borrowed (P) = $7550 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 9060, then the Principal = ¹⁰⁰/₁₂₀ × 9060

= ^{100 × 9060}/₁₂₀

= ⁹⁰⁶⁰⁰⁰/₁₂₀

= 7550

Thus, Principal = $7550

Thus, the sum borrowed = $7550 Answer

Similar Questions

(1) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5440 to clear the loan, then find the time period of the loan.

(2) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $10318 to clear the loan, then find the time period of the loan.

(3) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $8662 to clear the loan, then find the time period of the loan.

(4) Find the amount to be paid if John borrowed a sum of $5200 at 9% simple interest for 8 years.

(5) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $7987 to clear the loan, then find the time period of the loan.

(6) What amount does James have to pay after 5 years if he takes a loan of $3000 at 5% simple interest?

(7) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7242 to clear the loan, then find the time period of the loan.

(8) Calculate the amount due if Karen borrowed a sum of $3950 at 3% simple interest for 4 years.

(9) Matthew took a loan of $6400 at the rate of 10% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.

(10) How much loan did Michael borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6095 to clear it?