Question:
Elizabeth had to pay $3864 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
Correct Answer
$3450
Solution And Explanation
Solution
Given,
Amount (A) = $3864
Rate of Simple Interest (R) = 4%
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
$3864 = P (1 + 4% × 3)
⇒ $3864 = P (1 + 4/100 × 3)
⇒ $3864 = P (1 + 4 × 3/100)
⇒ $3864 = P (1 + 12/100)
⇒ $3864 = P (100 + 12/100)
⇒ $3864 = P × 112/100
⇒ P × 112/100 = $3864
⇒ P = 3864/112/100
⇒ P = 3864 × 100/112
⇒ P = 3864 × 100/112
⇒ P = 386400/112
⇒ P = $3450
Thus, the sum borrowed (P) = $3450 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 = 4% per annum
Thus, Interest = 4% of principal
⇒ Interest = 4% of 100 = 4
Thus, Simple Interest for 1 year = 4
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 × 4 = 12
Thus, simple interest for 3 years = 12
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 12 = 112
Calculation of the Principal
Now,
∵ If the Amount is 112, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/112
∴ If the Amount is 3864, then the Principal = 100/112 × 3864
= 100 × 3864/112
= 386400/112
= 3450
Thus, Principal = $3450
Thus, the sum borrowed = $3450 Answer
Similar Questions
(1) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7450 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 5% simple interest.
(3) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 4% simple interest.
(4) Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 4 years.
(5) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 2% simple interest.
(6) If Emily paid $5130 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(7) 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.
(8) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 8% simple interest?
(9) If David borrowed $3400 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(10) If Michael borrowed $3300 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.