Question:
How much loan did Anthony borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7245 to clear it?
Correct Answer
$6300
Solution And Explanation
Solution
Given,
Amount (A) = $7245
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
$7245 = P (1 + 3% × 5)
⇒ $7245 = P (1 + 3/100 × 5)
⇒ $7245 = P (1 + 3 × 5/100)
⇒ $7245 = P (1 + 15/100)
⇒ $7245 = P (100 + 15/100)
⇒ $7245 = P × 115/100
⇒ P × 115/100 = $7245
⇒ P = 7245/115/100
⇒ P = 7245 × 100/115
⇒ P = 7245 × 100/115
⇒ P = 724500/115
⇒ P = $6300
Thus, the sum borrowed (P) = $6300 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 7245, then the Principal = 100/115 × 7245
= 100 × 7245/115
= 724500/115
= 6300
Thus, Principal = $6300
Thus, the sum borrowed = $6300 Answer
Similar Questions
(1) Calculate the amount due if Jennifer borrowed a sum of $3250 at 10% simple interest for 3 years.
(2) Linda had to pay $3852.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(3) Find the amount to be paid if James borrowed a sum of $5000 at 2% simple interest for 8 years.
(4) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.
(5) If Matthew paid $4704 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 8% simple interest?
(7) Calculate the amount due if Jessica borrowed a sum of $3750 at 9% simple interest for 4 years.
(8) Find the amount to be paid if Linda borrowed a sum of $5350 at 5% simple interest for 7 years.
(9) Calculate the amount due if Thomas borrowed a sum of $3800 at 9% simple interest for 3 years.
(10) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5995 to clear it?