Simple Interest
Math MCQs

Question :    How much loan did Matthew borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7750 to clear it?

Correct Answer  $6200

Solution & Explanation

Solution

Given,

Amount (A) = $7750

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

$7750 = P (1 + 5% × 5)

⇒ $7750 = P (1 + ⁵/₁₀₀ × 5)

⇒ $7750 = P (1 + ^{5 × 5}/₁₀₀)

⇒ $7750 = P (1 + ²⁵/₁₀₀)

⇒ $7750 = P (^{100 + 25}/₁₀₀)

⇒ $7750 = P × ¹²⁵/₁₀₀

⇒ P × ¹²⁵/₁₀₀ = $7750

⇒ P = ⁷⁷⁵⁰/_¹²⁵/100

⇒ P = 7750 × ¹⁰⁰/₁₂₅

⇒ P = ^{7750 × 100}/₁₂₅

⇒ P = ⁷⁷⁵⁰⁰⁰/₁₂₅

⇒ P = $6200

Thus, the sum borrowed (P) = $6200 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 7750, then the Principal = ¹⁰⁰/₁₂₅ × 7750

= ^{100 × 7750}/₁₂₅

= ⁷⁷⁵⁰⁰⁰/₁₂₅

= 6200

Thus, Principal = $6200

Thus, the sum borrowed = $6200 Answer

Similar Questions

(1) If Elizabeth borrowed $3450 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.

(2) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 2% simple interest.

(3) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $7360 to clear the loan, then find the time period of the loan.

(4) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 5% simple interest.

(5) What amount does John have to pay after 5 years if he takes a loan of $3200 at 3% simple interest?

(6) If Joshua paid $5684 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.

(7) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $8256 to clear the loan, then find the time period of the loan.

(8) Christopher had to pay $4360 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.

(9) How much loan did Jessica borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6612.5 to clear it?

(10) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 10% simple interest?