Question:
Donald had to pay $5040 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
$4500
Solution And Explanation
Solution
Given,
Amount (A) = $5040
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
$5040 = P (1 + 4% × 3)
⇒ $5040 = P (1 + 4/100 × 3)
⇒ $5040 = P (1 + 4 × 3/100)
⇒ $5040 = P (1 + 12/100)
⇒ $5040 = P (100 + 12/100)
⇒ $5040 = P × 112/100
⇒ P × 112/100 = $5040
⇒ P = 5040/112/100
⇒ P = 5040 × 100/112
⇒ P = 5040 × 100/112
⇒ P = 504000/112
⇒ P = $4500
Thus, the sum borrowed (P) = $4500 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 5040, then the Principal = 100/112 × 5040
= 100 × 5040/112
= 504000/112
= 4500
Thus, Principal = $4500
Thus, the sum borrowed = $4500 Answer
Similar Questions
(1) If Michael paid $3960 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Elizabeth took a loan of $4900 at the rate of 6% simple interest per annum. If he paid an amount of $6958 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 10% simple interest.
(4) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
(5) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 5% simple interest?
(6) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 9% simple interest.
(7) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 9% simple interest?
(8) How much loan did Mary borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6312.5 to clear it?
(9) Find the amount to be paid if Joseph borrowed a sum of $5700 at 8% simple interest for 7 years.
(10) Find the amount to be paid if Susan borrowed a sum of $5650 at 3% simple interest for 7 years.