Question:
Margaret had to pay $5002.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
Correct Answer
$4350
Solution And Explanation
Solution
Given,
Amount (A) = $5002.5
Rate of Simple Interest (R) = 5%
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
$5002.5 = P (1 + 5% × 3)
⇒ $5002.5 = P (1 + 5/100 × 3)
⇒ $5002.5 = P (1 + 5 × 3/100)
⇒ $5002.5 = P (1 + 15/100)
⇒ $5002.5 = P (100 + 15/100)
⇒ $5002.5 = P × 115/100
⇒ P × 115/100 = $5002.5
⇒ P = 5002.5/115/100
⇒ P = 5002.5 × 100/115
⇒ P = 5002.5 × 100/115
⇒ P = 500250/115
⇒ P = $4350
Thus, the sum borrowed (P) = $4350 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 = 5% per annum
Thus, Interest = 5% of principal
⇒ Interest = 5% of 100 = 5
Thus, Simple Interest for 1 year = 5
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 × 5 = 15
Thus, simple interest for 3 years = 15
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 15 = 115
Calculation of the Principal
Now,
∵ If the Amount is 115, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/115
∴ If the Amount is 5002.5, then the Principal = 100/115 × 5002.5
= 100 × 5002.5/115
= 500250/115
= 4350
Thus, Principal = $4350
Thus, the sum borrowed = $4350 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 3% simple interest?
(2) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 4% simple interest for 8 years.
(3) If Kimberly paid $5580 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $13600 to clear the loan, then find the time period of the loan.
(5) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 8% simple interest?
(7) Find the amount to be paid if Barbara borrowed a sum of $5550 at 3% simple interest for 7 years.
(8) If Barbara borrowed $3550 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(9) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 9% simple interest.
(10) How much loan did Donna borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7877.5 to clear it?