Question:
If Steven paid $5336 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
Correct Answer
$4600
Solution And Explanation
Solution
Given,
Amount (A) = $5336
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
$5336 = P (1 + 4% × 4)
⇒ $5336 = P (1 + 4/100 × 4)
⇒ $5336 = P (1 + 4 × 4/100)
⇒ $5336 = P (1 + 16/100)
⇒ $5336 = P (100 + 16/100)
⇒ $5336 = P × 116/100
⇒ P × 116/100 = $5336
⇒ P = 5336/116/100
⇒ P = 5336 × 100/116
⇒ P = 5336 × 100/116
⇒ P = 533600/116
⇒ P = $4600
Thus, the sum borrowed (P) = $4600 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 5336, then the Principal = 100/116 × 5336
= 100 × 5336/116
= 533600/116
= 4600
Thus, Principal = $4600
Thus, the sum borrowed = $4600 Answer
Similar Questions
(1) William took a loan of $5000 at the rate of 6% simple interest per annum. If he paid an amount of $8000 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if John borrowed a sum of $5200 at 3% simple interest for 7 years.
(3) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 7% simple interest?
(4) Calculate the amount due if Barbara borrowed a sum of $3550 at 10% simple interest for 3 years.
(5) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 3% simple interest?
(6) How much loan did Edward borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9120 to clear it?
(7) Find the amount to be paid if Michael borrowed a sum of $5300 at 8% simple interest for 7 years.
(8) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $14000 to clear the loan, then find the time period of the loan.
(9) Daniel had to pay $4715 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(10) Joseph had to pay $3922 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.