Simple Interest
Math MCQs

Question :    How much loan did Karen borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7437.5 to clear it?

Correct Answer  $5950

Solution & Explanation

Solution

Given,

Amount (A) = $7437.5

Rate of Simple Interest (R) = 5%

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

$7437.5 = P (1 + 5% × 5)

⇒ $7437.5 = P (1 + ⁵/₁₀₀ × 5)

⇒ $7437.5 = P (1 + ^{5 × 5}/₁₀₀)

⇒ $7437.5 = P (1 + ²⁵/₁₀₀)

⇒ $7437.5 = P (^{100 + 25}/₁₀₀)

⇒ $7437.5 = P × ¹²⁵/₁₀₀

⇒ P × ¹²⁵/₁₀₀ = $7437.5

⇒ P = ^7437.5/_¹²⁵/100

⇒ P = 7437.5 × ¹⁰⁰/₁₂₅

⇒ P = ^{7437.5 × 100}/₁₂₅

⇒ P = ⁷⁴³⁷⁵⁰/₁₂₅

⇒ P = $5950

Thus, the sum borrowed (P) = $5950 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 = 5% per annum

Thus, Interest = 5% of principal

⇒ Interest = 5% of 100 = 5

Thus, Simple Interest for 1 year = 5

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 × 5 = 25

Thus, simple interest for 5 years = 25

Thus, Amount (A) = Principal + Interest

⇒ Amount = 100 + 25 = 125

Calculation of the Principal

Now,

∵ If the Amount is 125, then the Principal = 100

∴ If the Amount is 1, then the Principal = ¹⁰⁰/₁₂₅

∴ If the Amount is 7437.5, then the Principal = ¹⁰⁰/₁₂₅ × 7437.5

= ^{100 × 7437.5}/₁₂₅

= ⁷⁴³⁷⁵⁰/₁₂₅

= 5950

Thus, Principal = $5950

Thus, the sum borrowed = $5950 Answer

Similar Questions

(1) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $10800 to clear the loan, then find the time period of the loan.

(2) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 5% simple interest.

(3) If Barbara paid $3834 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.

(4) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 5% simple interest?

(5) Charles took a loan of $5800 at the rate of 8% simple interest per annum. If he paid an amount of $9976 to clear the loan, then find the time period of the loan.

(6) Find the amount to be paid if Mary borrowed a sum of $5050 at 4% simple interest for 8 years.

(7) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 6% simple interest?

(8) Sandra took a loan of $6900 at the rate of 8% simple interest per annum. If he paid an amount of $12420 to clear the loan, then find the time period of the loan.

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

(10) Calculate the amount due if Barbara borrowed a sum of $3550 at 3% simple interest for 3 years.