Question:
Paul had to pay $5264 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
$4700
Solution And Explanation
Solution
Given,
Amount (A) = $5264
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
$5264 = P (1 + 4% × 3)
⇒ $5264 = P (1 + 4/100 × 3)
⇒ $5264 = P (1 + 4 × 3/100)
⇒ $5264 = P (1 + 12/100)
⇒ $5264 = P (100 + 12/100)
⇒ $5264 = P × 112/100
⇒ P × 112/100 = $5264
⇒ P = 5264/112/100
⇒ P = 5264 × 100/112
⇒ P = 5264 × 100/112
⇒ P = 526400/112
⇒ P = $4700
Thus, the sum borrowed (P) = $4700 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 5264, then the Principal = 100/112 × 5264
= 100 × 5264/112
= 526400/112
= 4700
Thus, Principal = $4700
Thus, the sum borrowed = $4700 Answer
Similar Questions
(1) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(2) What amount does William have to pay after 6 years if he takes a loan of $3500 at 7% simple interest?
(3) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6708 to clear the loan, then find the time period of the loan.
(4) How much loan did Matthew borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7440 to clear it?
(5) In how much time a principal of $3100 will amount to $3875 at a simple interest of 5% per annum?
(6) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 8% simple interest?
(7) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 10% simple interest.
(8) Calculate the amount due if Barbara borrowed a sum of $3550 at 4% simple interest for 4 years.
(9) How much loan did Deborah borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9312.5 to clear it?
(10) Jennifer took a loan of $4500 at the rate of 10% simple interest per annum. If he paid an amount of $7200 to clear the loan, then find the time period of the loan.