Question:
How much loan did Christopher borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6900 to clear it?
Correct Answer
$6000
Solution And Explanation
Solution
Given,
Amount (A) = $6900
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
$6900 = P (1 + 3% × 5)
⇒ $6900 = P (1 + 3/100 × 5)
⇒ $6900 = P (1 + 3 × 5/100)
⇒ $6900 = P (1 + 15/100)
⇒ $6900 = P (100 + 15/100)
⇒ $6900 = P × 115/100
⇒ P × 115/100 = $6900
⇒ P = 6900/115/100
⇒ P = 6900 × 100/115
⇒ P = 6900 × 100/115
⇒ P = 690000/115
⇒ P = $6000
Thus, the sum borrowed (P) = $6000 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 6900, then the Principal = 100/115 × 6900
= 100 × 6900/115
= 690000/115
= 6000
Thus, Principal = $6000
Thus, the sum borrowed = $6000 Answer
Similar Questions
(1) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(2) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 4% simple interest?
(3) How much loan did Sandra borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7095 to clear it?
(4) Anthony had to pay $4687 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 6% simple interest?
(6) Find the amount to be paid if Susan borrowed a sum of $5650 at 8% simple interest for 7 years.
(7) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 9% simple interest.
(8) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(9) How much loan did Ryan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9480 to clear it?
(10) Charles took a loan of $5800 at the rate of 6% simple interest per annum. If he paid an amount of $8932 to clear the loan, then find the time period of the loan.