Question:
Paul had to pay $5405 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
$4700
Solution And Explanation
Solution
Given,
Amount (A) = $5405
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
$5405 = P (1 + 5% × 3)
⇒ $5405 = P (1 + 5/100 × 3)
⇒ $5405 = P (1 + 5 × 3/100)
⇒ $5405 = P (1 + 15/100)
⇒ $5405 = P (100 + 15/100)
⇒ $5405 = P × 115/100
⇒ P × 115/100 = $5405
⇒ P = 5405/115/100
⇒ P = 5405 × 100/115
⇒ P = 5405 × 100/115
⇒ P = 540500/115
⇒ 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 = 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 5405, then the Principal = 100/115 × 5405
= 100 × 5405/115
= 540500/115
= 4700
Thus, Principal = $4700
Thus, the sum borrowed = $4700 Answer
Similar Questions
(1) What amount will be due after 2 years if William borrowed a sum of $3250 at a 9% simple interest?
(2) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $8840 to clear the loan, then find the time period of the loan.
(3) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12308 to clear the loan, then find the time period of the loan.
(4) What amount does William have to pay after 5 years if he takes a loan of $3500 at 2% simple interest?
(5) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 6% simple interest?
(6) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 2% simple interest?
(7) How much loan did Brian borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8640 to clear it?
(8) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 10% simple interest.
(9) Lisa took a loan of $6100 at the rate of 7% simple interest per annum. If he paid an amount of $8662 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 2% simple interest.