Question:
If James paid $3360 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
Correct Answer
$3000
Solution And Explanation
Solution
Given,
Amount (A) = $3360
Rate of Simple Interest (R) = 3%
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
$3360 = P (1 + 3% × 4)
⇒ $3360 = P (1 + 3/100 × 4)
⇒ $3360 = P (1 + 3 × 4/100)
⇒ $3360 = P (1 + 12/100)
⇒ $3360 = P (100 + 12/100)
⇒ $3360 = P × 112/100
⇒ P × 112/100 = $3360
⇒ P = 3360/112/100
⇒ P = 3360 × 100/112
⇒ P = 3360 × 100/112
⇒ P = 336000/112
⇒ P = $3000
Thus, the sum borrowed (P) = $3000 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 = 3% per annum
Thus, Interest = 3% of principal
⇒ Interest = 3% of 100 = 3
Thus, Simple Interest for 1 year = 3
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 × 3 = 12
Thus, simple interest for 4 years = 12
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 12 = 112
Calculation of the Principal
Now,
∵ If the Amount is 112, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/112
∴ If the Amount is 3360, then the Principal = 100/112 × 3360
= 100 × 3360/112
= 336000/112
= 3000
Thus, Principal = $3000
Thus, the sum borrowed = $3000 Answer
Similar Questions
(1) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 5% simple interest.
(2) How much loan did Linda borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6687.5 to clear it?
(3) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $9240 to clear the loan, then find the time period of the loan.
(4) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $9128 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 3% simple interest.
(6) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 4% simple interest.
(7) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 7% simple interest.
(8) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 9% simple interest.
(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 8% simple interest for 8 years.
(10) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 4% simple interest.