Question:
Betty had to pay $4760 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
$4250
Solution And Explanation
Solution
Given,
Amount (A) = $4760
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
$4760 = P (1 + 4% × 3)
⇒ $4760 = P (1 + 4/100 × 3)
⇒ $4760 = P (1 + 4 × 3/100)
⇒ $4760 = P (1 + 12/100)
⇒ $4760 = P (100 + 12/100)
⇒ $4760 = P × 112/100
⇒ P × 112/100 = $4760
⇒ P = 4760/112/100
⇒ P = 4760 × 100/112
⇒ P = 4760 × 100/112
⇒ P = 476000/112
⇒ P = $4250
Thus, the sum borrowed (P) = $4250 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 4760, then the Principal = 100/112 × 4760
= 100 × 4760/112
= 476000/112
= 4250
Thus, Principal = $4250
Thus, the sum borrowed = $4250 Answer
Similar Questions
(1) Robert took a loan of $4200 at the rate of 6% simple interest per annum. If he paid an amount of $5712 to clear the loan, then find the time period of the loan.
(2) How much loan did Andrew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7480 to clear it?
(3) Find the amount to be paid if James borrowed a sum of $5000 at 9% simple interest for 7 years.
(4) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8312.5 to clear it?
(5) Find the amount to be paid if Mary borrowed a sum of $5050 at 9% simple interest for 7 years.
(6) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 7% simple interest?
(7) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7975 to clear it?
(8) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $7824 to clear the loan, then find the time period of the loan.
(9) If Lisa paid $4860 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 10% simple interest?