Question:
How much loan did William borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6050 to clear it?
Correct Answer
$5500
Solution And Explanation
Solution
Given,
Amount (A) = $6050
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
$6050 = P (1 + 2% × 5)
⇒ $6050 = P (1 + 2/100 × 5)
⇒ $6050 = P (1 + 2 × 5/100)
⇒ $6050 = P (1 + 10/100)
⇒ $6050 = P (100 + 10/100)
⇒ $6050 = P × 110/100
⇒ P × 110/100 = $6050
⇒ P = 6050/110/100
⇒ P = 6050 × 100/110
⇒ P = 6050 × 100/110
⇒ P = 605000/110
⇒ P = $5500
Thus, the sum borrowed (P) = $5500 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 6050, then the Principal = 100/110 × 6050
= 100 × 6050/110
= 605000/110
= 5500
Thus, Principal = $5500
Thus, the sum borrowed = $5500 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 9% simple interest.
(2) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 5% simple interest?
(3) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 2% simple interest?
(4) Sarah took a loan of $5700 at the rate of 8% simple interest per annum. If he paid an amount of $9348 to clear the loan, then find the time period of the loan.
(5) How much loan did Daniel borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6710 to clear it?
(6) Robert had to pay $3379 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(7) Calculate the amount due if Mary borrowed a sum of $3050 at 9% simple interest for 3 years.
(8) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 3 years.
(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 8% simple interest for 8 years.
(10) Calculate the amount due if Robert borrowed a sum of $3100 at 4% simple interest for 3 years.