Question:
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.
Correct Answer
$4850
Solution And Explanation
Solution
Given,
Amount (A) = $5432
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
$5432 = P (1 + 3% × 4)
⇒ $5432 = P (1 + 3/100 × 4)
⇒ $5432 = P (1 + 3 × 4/100)
⇒ $5432 = P (1 + 12/100)
⇒ $5432 = P (100 + 12/100)
⇒ $5432 = P × 112/100
⇒ P × 112/100 = $5432
⇒ P = 5432/112/100
⇒ P = 5432 × 100/112
⇒ P = 5432 × 100/112
⇒ P = 543200/112
⇒ P = $4850
Thus, the sum borrowed (P) = $4850 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 5432, then the Principal = 100/112 × 5432
= 100 × 5432/112
= 543200/112
= 4850
Thus, Principal = $4850
Thus, the sum borrowed = $4850 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 10% simple interest?
(2) What amount does James have to pay after 6 years if he takes a loan of $3000 at 8% simple interest?
(3) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 3% simple interest.
(4) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 9% simple interest?
(5) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 8% simple interest for 4 years.
(6) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 10% simple interest.
(7) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 9% simple interest.
(8) What amount will be due after 2 years if James borrowed a sum of $3000 at a 4% simple interest?
(9) Jessica had to pay $4312.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(10) Calculate the amount due if William borrowed a sum of $3500 at 9% simple interest for 4 years.