Question:
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.
Correct Answer
$4500
Solution And Explanation
Solution
Given,
Amount (A) = $5040
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
$5040 = P (1 + 3% × 4)
⇒ $5040 = P (1 + 3/100 × 4)
⇒ $5040 = P (1 + 3 × 4/100)
⇒ $5040 = P (1 + 12/100)
⇒ $5040 = P (100 + 12/100)
⇒ $5040 = P × 112/100
⇒ P × 112/100 = $5040
⇒ P = 5040/112/100
⇒ P = 5040 × 100/112
⇒ P = 5040 × 100/112
⇒ P = 504000/112
⇒ P = $4500
Thus, the sum borrowed (P) = $4500 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 5040, then the Principal = 100/112 × 5040
= 100 × 5040/112
= 504000/112
= 4500
Thus, Principal = $4500
Thus, the sum borrowed = $4500 Answer
Similar Questions
(1) Calculate the amount due if Thomas borrowed a sum of $3800 at 7% simple interest for 4 years.
(2) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 4% simple interest.
(3) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $10168 to clear the loan, then find the time period of the loan.
(4) How much loan did Brian borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8640 to clear it?
(5) What amount will be due after 2 years if William borrowed a sum of $3250 at a 10% simple interest?
(6) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 4% simple interest.
(7) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $9204 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 10% simple interest.
(9) Linda had to pay $3852.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(10) Find the amount to be paid if Patricia borrowed a sum of $5150 at 3% simple interest for 7 years.