Question:
If Matthew paid $4536 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
Correct Answer
$4200
Solution And Explanation
Solution
Given,
Amount (A) = $4536
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
$4536 = P (1 + 2% × 4)
⇒ $4536 = P (1 + 2/100 × 4)
⇒ $4536 = P (1 + 2 × 4/100)
⇒ $4536 = P (1 + 8/100)
⇒ $4536 = P (100 + 8/100)
⇒ $4536 = P × 108/100
⇒ P × 108/100 = $4536
⇒ P = 4536/108/100
⇒ P = 4536 × 100/108
⇒ P = 4536 × 100/108
⇒ P = 453600/108
⇒ P = $4200
Thus, the sum borrowed (P) = $4200 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 4536, then the Principal = 100/108 × 4536
= 100 × 4536/108
= 453600/108
= 4200
Thus, Principal = $4200
Thus, the sum borrowed = $4200 Answer
Similar Questions
(1) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $10620 to clear the loan, then find the time period of the loan.
(2) If Donald paid $5040 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(3) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $8840 to clear the loan, then find the time period of the loan.
(4) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $8736 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Susan borrowed a sum of $3650 at 4% simple interest for 3 years.
(6) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(7) If Richard paid $4032 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(8) Calculate the amount due if William borrowed a sum of $3500 at 3% simple interest for 3 years.
(9) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 10% simple interest?
(10) If Daniel paid $4592 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.