Question:
How much loan did Joseph borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6555 to clear it?
Correct Answer
$5700
Solution And Explanation
Solution
Given,
Amount (A) = $6555
Rate of Simple Interest (R) = 3%
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
$6555 = P (1 + 3% × 5)
⇒ $6555 = P (1 + 3/100 × 5)
⇒ $6555 = P (1 + 3 × 5/100)
⇒ $6555 = P (1 + 15/100)
⇒ $6555 = P (100 + 15/100)
⇒ $6555 = P × 115/100
⇒ P × 115/100 = $6555
⇒ P = 6555/115/100
⇒ P = 6555 × 100/115
⇒ P = 6555 × 100/115
⇒ P = 655500/115
⇒ P = $5700
Thus, the sum borrowed (P) = $5700 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 = 3% per annum
Thus, Interest = 3% of principal
⇒ Interest = 3% of 100 = 3
Thus, Simple Interest for 1 year = 3
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 × 3 = 15
Thus, simple interest for 5 years = 15
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 15 = 115
Calculation of the Principal
Now,
∵ If the Amount is 115, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/115
∴ If the Amount is 6555, then the Principal = 100/115 × 6555
= 100 × 6555/115
= 655500/115
= 5700
Thus, Principal = $5700
Thus, the sum borrowed = $5700 Answer
Similar Questions
(1) Donna had to pay $5286.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7009 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 10% simple interest.
(5) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 3% simple interest?
(6) Find the amount to be paid if William borrowed a sum of $5500 at 8% simple interest for 8 years.
(7) Calculate the amount due if Michael borrowed a sum of $3300 at 5% simple interest for 4 years.
(8) Find the amount to be paid if Jessica borrowed a sum of $5750 at 6% simple interest for 7 years.
(9) Jennifer had to pay $3445 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(10) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $11050 to clear the loan, then find the time period of the loan.