Question:
If Daniel paid $4756 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
Correct Answer
$4100
Solution And Explanation
Solution
Given,
Amount (A) = $4756
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
$4756 = P (1 + 4% × 4)
⇒ $4756 = P (1 + 4/100 × 4)
⇒ $4756 = P (1 + 4 × 4/100)
⇒ $4756 = P (1 + 16/100)
⇒ $4756 = P (100 + 16/100)
⇒ $4756 = P × 116/100
⇒ P × 116/100 = $4756
⇒ P = 4756/116/100
⇒ P = 4756 × 100/116
⇒ P = 4756 × 100/116
⇒ P = 475600/116
⇒ P = $4100
Thus, the sum borrowed (P) = $4100 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 4756, then the Principal = 100/116 × 4756
= 100 × 4756/116
= 475600/116
= 4100
Thus, Principal = $4100
Thus, the sum borrowed = $4100 Answer
Similar Questions
(1) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $6400 to clear the loan, then find the time period of the loan.
(2) If Barbara paid $3834 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(3) Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 4 years.
(4) What amount will be due after 2 years if James borrowed a sum of $3000 at a 8% simple interest?
(5) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7242 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Mary borrowed a sum of $5050 at 10% simple interest for 7 years.
(7) Andrew had to pay $5088 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 8 years.
(9) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.
(10) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 10% simple interest?