Simple Interest
Math MCQs

Question :    How much loan did Jason borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9625 to clear it?

Correct Answer  $7700

Solution & Explanation

Solution

Given,

Amount (A) = $9625

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

$9625 = P (1 + 5% × 5)

⇒ $9625 = P (1 + ⁵/₁₀₀ × 5)

⇒ $9625 = P (1 + ^{5 × 5}/₁₀₀)

⇒ $9625 = P (1 + ²⁵/₁₀₀)

⇒ $9625 = P (^{100 + 25}/₁₀₀)

⇒ $9625 = P × ¹²⁵/₁₀₀

⇒ P × ¹²⁵/₁₀₀ = $9625

⇒ P = ⁹⁶²⁵/_¹²⁵/100

⇒ P = 9625 × ¹⁰⁰/₁₂₅

⇒ P = ^{9625 × 100}/₁₂₅

⇒ P = ⁹⁶²⁵⁰⁰/₁₂₅

⇒ P = $7700

Thus, the sum borrowed (P) = $7700 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 9625, then the Principal = ¹⁰⁰/₁₂₅ × 9625

= ^{100 × 9625}/₁₂₅

= ⁹⁶²⁵⁰⁰/₁₂₅

= 7700

Thus, Principal = $7700

Thus, the sum borrowed = $7700 Answer

Similar Questions

(1) Calculate the amount due if Jessica borrowed a sum of $3750 at 10% simple interest for 4 years.

(2) How much loan did Linda borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6420 to clear it?

(3) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 4% simple interest?

(4) Find the amount to be paid if Susan borrowed a sum of $5650 at 5% simple interest for 7 years.

(5) If Sarah paid $4312 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.

(6) If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.

(7) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.

(8) If Ashley paid $5278 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.

(9) If Jessica paid $4500 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.

(10) If Donna paid $5820 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.