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) Calculate the amount due if Jennifer borrowed a sum of $3250 at 10% simple interest for 3 years.
(2) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $8944 to clear the loan, then find the time period of the loan.
(3) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 2% simple interest?
(4) Calculate the amount due if John borrowed a sum of $3200 at 4% simple interest for 4 years.
(5) Calculate the amount due if Charles borrowed a sum of $3900 at 9% simple interest for 3 years.
(6) In how much time a principal of $3050 will amount to $3660 at a simple interest of 4% per annum?
(7) If Michael borrowed $3300 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(8) Thomas took a loan of $5600 at the rate of 10% simple interest per annum. If he paid an amount of $10640 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 8% simple interest?
(10) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 6% simple interest.