Question:
If Thomas paid $4560 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
Correct Answer
$3800
Solution And Explanation
Solution
Given,
Amount (A) = $4560
Rate of Simple Interest (R) = 5%
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
$4560 = P (1 + 5% × 4)
⇒ $4560 = P (1 + 5/100 × 4)
⇒ $4560 = P (1 + 5 × 4/100)
⇒ $4560 = P (1 + 20/100)
⇒ $4560 = P (100 + 20/100)
⇒ $4560 = P × 120/100
⇒ P × 120/100 = $4560
⇒ P = 4560/120/100
⇒ P = 4560 × 100/120
⇒ P = 4560 × 100/120
⇒ P = 456000/120
⇒ P = $3800
Thus, the sum borrowed (P) = $3800 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 = 5% per annum
Thus, Interest = 5% of principal
⇒ Interest = 5% of 100 = 5
Thus, Simple Interest for 1 year = 5
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 × 5 = 20
Thus, simple interest for 4 years = 20
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 20 = 120
Calculation of the Principal
Now,
∵ If the Amount is 120, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/120
∴ If the Amount is 4560, then the Principal = 100/120 × 4560
= 100 × 4560/120
= 456000/120
= 3800
Thus, Principal = $3800
Thus, the sum borrowed = $3800 Answer
Similar Questions
(1) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $12540 to clear the loan, then find the time period of the loan.
(2) If Daniel paid $4428 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(3) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 3% simple interest for 8 years.
(4) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $10010 to clear the loan, then find the time period of the loan.
(5) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(6) Jessica took a loan of $5500 at the rate of 7% simple interest per annum. If he paid an amount of $7810 to clear the loan, then find the time period of the loan.
(7) How much loan did Edward borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8360 to clear it?
(8) Betty took a loan of $6500 at the rate of 10% simple interest per annum. If he paid an amount of $13000 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 10% simple interest?
(10) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 7% simple interest?