Simple Interest
Math MCQs

Question :    How much loan did Paul borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8375 to clear it?

Correct Answer  $6700

Solution & Explanation

Solution

Given,

Amount (A) = $8375

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

$8375 = P (1 + 5% × 5)

⇒ $8375 = P (1 + ⁵/₁₀₀ × 5)

⇒ $8375 = P (1 + ^{5 × 5}/₁₀₀)

⇒ $8375 = P (1 + ²⁵/₁₀₀)

⇒ $8375 = P (^{100 + 25}/₁₀₀)

⇒ $8375 = P × ¹²⁵/₁₀₀

⇒ P × ¹²⁵/₁₀₀ = $8375

⇒ P = ⁸³⁷⁵/_¹²⁵/100

⇒ P = 8375 × ¹⁰⁰/₁₂₅

⇒ P = ^{8375 × 100}/₁₂₅

⇒ P = ⁸³⁷⁵⁰⁰/₁₂₅

⇒ P = $6700

Thus, the sum borrowed (P) = $6700 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 8375, then the Principal = ¹⁰⁰/₁₂₅ × 8375

= ^{100 × 8375}/₁₂₅

= ⁸³⁷⁵⁰⁰/₁₂₅

= 6700

Thus, Principal = $6700

Thus, the sum borrowed = $6700 Answer

Similar Questions

(1) In how much time a principal of $3150 will amount to $3433.5 at a simple interest of 3% per annum?

(2) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 6% simple interest.

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

(4) How much loan did Christopher borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7200 to clear it?

(5) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.

(6) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 9% simple interest.

(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 2% simple interest?

(8) If Paul paid $5452 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.

(9) Find the amount to be paid if Patricia borrowed a sum of $5150 at 4% simple interest for 8 years.

(10) Linda had to pay $3752 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.