Question:
If David paid $3944 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
Correct Answer
$3400
Solution And Explanation
Solution
Given,
Amount (A) = $3944
Rate of Simple Interest (R) = 4%
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
$3944 = P (1 + 4% × 4)
⇒ $3944 = P (1 + 4/100 × 4)
⇒ $3944 = P (1 + 4 × 4/100)
⇒ $3944 = P (1 + 16/100)
⇒ $3944 = P (100 + 16/100)
⇒ $3944 = P × 116/100
⇒ P × 116/100 = $3944
⇒ P = 3944/116/100
⇒ P = 3944 × 100/116
⇒ P = 3944 × 100/116
⇒ P = 394400/116
⇒ P = $3400
Thus, the sum borrowed (P) = $3400 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 = 4% per annum
Thus, Interest = 4% of principal
⇒ Interest = 4% of 100 = 4
Thus, Simple Interest for 1 year = 4
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 × 4 = 16
Thus, simple interest for 4 years = 16
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 16 = 116
Calculation of the Principal
Now,
∵ If the Amount is 116, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/116
∴ If the Amount is 3944, then the Principal = 100/116 × 3944
= 100 × 3944/116
= 394400/116
= 3400
Thus, Principal = $3400
Thus, the sum borrowed = $3400 Answer
Similar Questions
(1) What amount does David have to pay after 5 years if he takes a loan of $3400 at 10% simple interest?
(2) Daniel took a loan of $6200 at the rate of 6% simple interest per annum. If he paid an amount of $9548 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 9% simple interest for 7 years.
(4) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $11352 to clear the loan, then find the time period of the loan.
(5) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $11180 to clear the loan, then find the time period of the loan.
(6) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 4% simple interest?
(7) How much loan did Rebecca borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9180 to clear it?
(8) Karen took a loan of $5900 at the rate of 9% simple interest per annum. If he paid an amount of $9617 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Charles borrowed a sum of $3900 at 10% simple interest for 3 years.
(10) If William borrowed $3500 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.