Question:
Michael had to pay $3498 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
Correct Answer
$3300
Solution And Explanation
Solution
Given,
Amount (A) = $3498
Rate of Simple Interest (R) = 2%
Time (T) = 3 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
$3498 = P (1 + 2% × 3)
⇒ $3498 = P (1 + 2/100 × 3)
⇒ $3498 = P (1 + 2 × 3/100)
⇒ $3498 = P (1 + 6/100)
⇒ $3498 = P (100 + 6/100)
⇒ $3498 = P × 106/100
⇒ P × 106/100 = $3498
⇒ P = 3498/106/100
⇒ P = 3498 × 100/106
⇒ P = 3498 × 100/106
⇒ P = 349800/106
⇒ P = $3300
Thus, the sum borrowed (P) = $3300 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 = 2% per annum
Thus, Interest = 2% of principal
⇒ Interest = 2% of 100 = 2
Thus, Simple Interest for 1 year = 2
Calculation of the Amount
Since, in the question, time = 3 years
So, we need to calculate the simple interest for the given time period, which is 3 years
Thus, Simple Interest for 3 years = 3 × Simple Interest for 1 year
= 3 × 2 = 6
Thus, simple interest for 3 years = 6
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 6 = 106
Calculation of the Principal
Now,
∵ If the Amount is 106, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/106
∴ If the Amount is 3498, then the Principal = 100/106 × 3498
= 100 × 3498/106
= 349800/106
= 3300
Thus, Principal = $3300
Thus, the sum borrowed = $3300 Answer
Similar Questions
(1) If Patricia paid $3780 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 5% simple interest?
(3) In how much time a principal of $3100 will amount to $3224 at a simple interest of 2% per annum?
(4) Find the amount to be paid if James borrowed a sum of $5000 at 8% simple interest for 7 years.
(5) How much loan did Matthew borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7130 to clear it?
(6) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 2% simple interest.
(7) Calculate the amount due if William borrowed a sum of $3500 at 9% simple interest for 3 years.
(8) Calculate the amount due if Jessica borrowed a sum of $3750 at 9% simple interest for 3 years.
(9) Elizabeth took a loan of $4900 at the rate of 7% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Charles borrowed a sum of $5900 at 3% simple interest for 8 years.