Question:
How much loan did Jennifer borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5775 to clear it?
Correct Answer
$5250
Solution And Explanation
Solution
Given,
Amount (A) = $5775
Rate of Simple Interest (R) = 2%
Time (T) = 5 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
$5775 = P (1 + 2% × 5)
⇒ $5775 = P (1 + 2/100 × 5)
⇒ $5775 = P (1 + 2 × 5/100)
⇒ $5775 = P (1 + 10/100)
⇒ $5775 = P (100 + 10/100)
⇒ $5775 = P × 110/100
⇒ P × 110/100 = $5775
⇒ P = 5775/110/100
⇒ P = 5775 × 100/110
⇒ P = 5775 × 100/110
⇒ P = 577500/110
⇒ P = $5250
Thus, the sum borrowed (P) = $5250 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 = 2% per annum
Thus, Interest = 2% of principal
⇒ Interest = 2% of 100 = 2
Thus, Simple Interest for 1 year = 2
Calculation of the Amount
Since, in the question, time = 5 years
So, we need to calculate the simple interest for the given time period, which is 5 years
Thus, Simple Interest for 5 years = 5 × Simple Interest for 1 year
= 5 × 2 = 10
Thus, simple interest for 5 years = 10
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 10 = 110
Calculation of the Principal
Now,
∵ If the Amount is 110, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/110
∴ If the Amount is 5775, then the Principal = 100/110 × 5775
= 100 × 5775/110
= 577500/110
= 5250
Thus, Principal = $5250
Thus, the sum borrowed = $5250 Answer
Similar Questions
(1) Find the amount to be paid if Joseph borrowed a sum of $5700 at 6% simple interest for 7 years.
(2) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 10% simple interest.
(3) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 2% simple interest?
(4) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(5) Find the amount to be paid if Linda borrowed a sum of $5350 at 4% simple interest for 7 years.
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 9% simple interest for 8 years.
(7) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 10% simple interest?
(8) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $9672 to clear the loan, then find the time period of the loan.
(9) If Sandra paid $5162 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(10) How much loan did Karen borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6545 to clear it?