Question:
Ashley had to pay $5232.5 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
$4550
Solution And Explanation
Solution
Given,
Amount (A) = $5232.5
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
$5232.5 = P (1 + 5% × 3)
⇒ $5232.5 = P (1 + 5/100 × 3)
⇒ $5232.5 = P (1 + 5 × 3/100)
⇒ $5232.5 = P (1 + 15/100)
⇒ $5232.5 = P (100 + 15/100)
⇒ $5232.5 = P × 115/100
⇒ P × 115/100 = $5232.5
⇒ P = 5232.5/115/100
⇒ P = 5232.5 × 100/115
⇒ P = 5232.5 × 100/115
⇒ P = 523250/115
⇒ P = $4550
Thus, the sum borrowed (P) = $4550 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 5232.5, then the Principal = 100/115 × 5232.5
= 100 × 5232.5/115
= 523250/115
= 4550
Thus, Principal = $4550
Thus, the sum borrowed = $4550 Answer
Similar Questions
(1) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 4% simple interest?
(2) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 4 years.
(3) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $10080 to clear the loan, then find the time period of the loan.
(4) If Charles paid $4680 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) How much loan did Emily borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7762.5 to clear it?
(6) Calculate the amount due if Linda borrowed a sum of $3350 at 4% simple interest for 4 years.
(7) Find the amount to be paid if Sarah borrowed a sum of $5850 at 10% simple interest for 7 years.
(8) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 6% simple interest?
(9) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 2% simple interest?
(10) Find the amount to be paid if Christopher borrowed a sum of $6000 at 3% simple interest for 8 years.