Question:
If Barbara paid $3834 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
Correct Answer
$3550
Solution And Explanation
Solution
Given,
Amount (A) = $3834
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
$3834 = P (1 + 2% × 4)
⇒ $3834 = P (1 + 2/100 × 4)
⇒ $3834 = P (1 + 2 × 4/100)
⇒ $3834 = P (1 + 8/100)
⇒ $3834 = P (100 + 8/100)
⇒ $3834 = P × 108/100
⇒ P × 108/100 = $3834
⇒ P = 3834/108/100
⇒ P = 3834 × 100/108
⇒ P = 3834 × 100/108
⇒ P = 383400/108
⇒ P = $3550
Thus, the sum borrowed (P) = $3550 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 3834, then the Principal = 100/108 × 3834
= 100 × 3834/108
= 383400/108
= 3550
Thus, Principal = $3550
Thus, the sum borrowed = $3550 Answer
Similar Questions
(1) Find the amount to be paid if Sarah borrowed a sum of $5850 at 4% simple interest for 8 years.
(2) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $8820 to clear the loan, then find the time period of the loan.
(3) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 6% simple interest?
(4) Calculate the amount due if John borrowed a sum of $3200 at 4% simple interest for 4 years.
(5) If Donna paid $5432 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) Find the amount to be paid if Susan borrowed a sum of $5650 at 8% simple interest for 8 years.
(7) What amount does William have to pay after 6 years if he takes a loan of $3500 at 3% simple interest?
(8) If Karen paid $4266 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Mary took a loan of $4100 at the rate of 7% simple interest per annum. If he paid an amount of $6109 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if John borrowed a sum of $5200 at 7% simple interest for 7 years.