Question:
If Matthew paid $4704 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
Correct Answer
$4200
Solution And Explanation
Solution
Given,
Amount (A) = $4704
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
$4704 = P (1 + 3% × 4)
⇒ $4704 = P (1 + 3/100 × 4)
⇒ $4704 = P (1 + 3 × 4/100)
⇒ $4704 = P (1 + 12/100)
⇒ $4704 = P (100 + 12/100)
⇒ $4704 = P × 112/100
⇒ P × 112/100 = $4704
⇒ P = 4704/112/100
⇒ P = 4704 × 100/112
⇒ P = 4704 × 100/112
⇒ P = 470400/112
⇒ 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 = 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 4704, then the Principal = 100/112 × 4704
= 100 × 4704/112
= 470400/112
= 4200
Thus, Principal = $4200
Thus, the sum borrowed = $4200 Answer
Similar Questions
(1) Calculate the amount due if John borrowed a sum of $3200 at 6% simple interest for 4 years.
(2) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $8791 to clear the loan, then find the time period of the loan.
(3) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if John borrowed a sum of $3200 at 4% simple interest for 4 years.
(5) Calculate the amount due if Richard borrowed a sum of $3600 at 6% simple interest for 4 years.
(6) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $6258 to clear the loan, then find the time period of the loan.
(7) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 9% simple interest?
(8) Find the amount to be paid if David borrowed a sum of $5400 at 4% simple interest for 7 years.
(9) David had to pay $3808 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) What amount will be due after 2 years if James borrowed a sum of $3000 at a 6% simple interest?