Question:
How much loan did Paul borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7705 to clear it?
Correct Answer
$6700
Solution And Explanation
Solution
Given,
Amount (A) = $7705
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
$7705 = P (1 + 3% × 5)
⇒ $7705 = P (1 + 3/100 × 5)
⇒ $7705 = P (1 + 3 × 5/100)
⇒ $7705 = P (1 + 15/100)
⇒ $7705 = P (100 + 15/100)
⇒ $7705 = P × 115/100
⇒ P × 115/100 = $7705
⇒ P = 7705/115/100
⇒ P = 7705 × 100/115
⇒ P = 7705 × 100/115
⇒ P = 770500/115
⇒ P = $6700
Thus, the sum borrowed (P) = $6700 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 7705, then the Principal = 100/115 × 7705
= 100 × 7705/115
= 770500/115
= 6700
Thus, Principal = $6700
Thus, the sum borrowed = $6700 Answer
Similar Questions
(1) Find the amount to be paid if Jessica borrowed a sum of $5750 at 6% simple interest for 8 years.
(2) In how much time a principal of $3050 will amount to $3355 at a simple interest of 5% per annum?
(3) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 3% simple interest.
(4) If Daniel paid $4428 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(5) Calculate the amount due if William borrowed a sum of $3500 at 10% simple interest for 4 years.
(6) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 4% simple interest.
(7) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9112 to clear the loan, then find the time period of the loan.
(8) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 3% simple interest?
(9) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 9% simple interest?
(10) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $8550 to clear the loan, then find the time period of the loan.