Question:
If Donna paid $5820 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
Correct Answer
$4850
Solution And Explanation
Solution
Given,
Amount (A) = $5820
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
$5820 = P (1 + 5% × 4)
⇒ $5820 = P (1 + 5/100 × 4)
⇒ $5820 = P (1 + 5 × 4/100)
⇒ $5820 = P (1 + 20/100)
⇒ $5820 = P (100 + 20/100)
⇒ $5820 = P × 120/100
⇒ P × 120/100 = $5820
⇒ P = 5820/120/100
⇒ P = 5820 × 100/120
⇒ P = 5820 × 100/120
⇒ P = 582000/120
⇒ P = $4850
Thus, the sum borrowed (P) = $4850 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 5820, then the Principal = 100/120 × 5820
= 100 × 5820/120
= 582000/120
= 4850
Thus, Principal = $4850
Thus, the sum borrowed = $4850 Answer
Similar Questions
(1) Mary had to pay $3233 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) Calculate the amount due if Jessica borrowed a sum of $3750 at 6% simple interest for 3 years.
(3) Calculate the amount due if James borrowed a sum of $3000 at 7% simple interest for 4 years.
(4) If Robert borrowed $3100 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(5) Matthew took a loan of $6400 at the rate of 7% simple interest per annum. If he paid an amount of $9536 to clear the loan, then find the time period of the loan.
(6) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(7) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 7% simple interest?
(8) If Lisa paid $4698 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Find the amount to be paid if Robert borrowed a sum of $5100 at 7% simple interest for 8 years.
(10) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 8% simple interest.