Question:
If Sandra paid $5340 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
Correct Answer
$4450
Solution And Explanation
Solution
Given,
Amount (A) = $5340
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
$5340 = P (1 + 5% × 4)
⇒ $5340 = P (1 + 5/100 × 4)
⇒ $5340 = P (1 + 5 × 4/100)
⇒ $5340 = P (1 + 20/100)
⇒ $5340 = P (100 + 20/100)
⇒ $5340 = P × 120/100
⇒ P × 120/100 = $5340
⇒ P = 5340/120/100
⇒ P = 5340 × 100/120
⇒ P = 5340 × 100/120
⇒ P = 534000/120
⇒ P = $4450
Thus, the sum borrowed (P) = $4450 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 5340, then the Principal = 100/120 × 5340
= 100 × 5340/120
= 534000/120
= 4450
Thus, Principal = $4450
Thus, the sum borrowed = $4450 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 6% simple interest.
(2) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9112 to clear the loan, then find the time period of the loan.
(3) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $7740 to clear the loan, then find the time period of the loan.
(4) Linda had to pay $3551 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(5) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 6% simple interest?
(6) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $6674 to clear the loan, then find the time period of the loan.
(7) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 7% simple interest?
(8) What amount does John have to pay after 5 years if he takes a loan of $3200 at 10% simple interest?
(9) Calculate the amount due if Barbara borrowed a sum of $3550 at 2% simple interest for 3 years.
(10) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8312.5 to clear it?