Question:
If Linda paid $3618 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
Correct Answer
$3350
Solution And Explanation
Solution
Given,
Amount (A) = $3618
Rate of Simple Interest (R) = 2%
Time (T) = 4 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
$3618 = P (1 + 2% × 4)
⇒ $3618 = P (1 + 2/100 × 4)
⇒ $3618 = P (1 + 2 × 4/100)
⇒ $3618 = P (1 + 8/100)
⇒ $3618 = P (100 + 8/100)
⇒ $3618 = P × 108/100
⇒ P × 108/100 = $3618
⇒ P = 3618/108/100
⇒ P = 3618 × 100/108
⇒ P = 3618 × 100/108
⇒ P = 361800/108
⇒ P = $3350
Thus, the sum borrowed (P) = $3350 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 = 2% per annum
Thus, Interest = 2% of principal
⇒ Interest = 2% of 100 = 2
Thus, Simple Interest for 1 year = 2
Calculation of the Amount
Since, in the question, time = 4 years
So, we need to calculate the simple interest for the given time period, which is 4 years
Thus, Simple Interest for 4 years = 4 × Simple Interest for 1 year
= 4 × 2 = 8
Thus, simple interest for 4 years = 8
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 8 = 108
Calculation of the Principal
Now,
∵ If the Amount is 108, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/108
∴ If the Amount is 3618, then the Principal = 100/108 × 3618
= 100 × 3618/108
= 361800/108
= 3350
Thus, Principal = $3350
Thus, the sum borrowed = $3350 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 7% simple interest.
(2) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $7052 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Karen borrowed a sum of $5950 at 6% simple interest for 8 years.
(4) Kimberly had to pay $5068.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) Charles took a loan of $5800 at the rate of 9% simple interest per annum. If he paid an amount of $8932 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Sarah borrowed a sum of $5850 at 3% simple interest for 8 years.
(7) Find the amount to be paid if Susan borrowed a sum of $5650 at 8% simple interest for 8 years.
(8) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 9% simple interest?
(9) Calculate the amount due if Jessica borrowed a sum of $3750 at 3% simple interest for 3 years.
(10) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 9% simple interest?