Question:
How much loan did Joshua borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7935 to clear it?
Correct Answer
$6900
Solution And Explanation
Solution
Given,
Amount (A) = $7935
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
$7935 = P (1 + 3% × 5)
⇒ $7935 = P (1 + 3/100 × 5)
⇒ $7935 = P (1 + 3 × 5/100)
⇒ $7935 = P (1 + 15/100)
⇒ $7935 = P (100 + 15/100)
⇒ $7935 = P × 115/100
⇒ P × 115/100 = $7935
⇒ P = 7935/115/100
⇒ P = 7935 × 100/115
⇒ P = 7935 × 100/115
⇒ P = 793500/115
⇒ P = $6900
Thus, the sum borrowed (P) = $6900 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 7935, then the Principal = 100/115 × 7935
= 100 × 7935/115
= 793500/115
= 6900
Thus, Principal = $6900
Thus, the sum borrowed = $6900 Answer
Similar Questions
(1) Patricia took a loan of $4300 at the rate of 9% simple interest per annum. If he paid an amount of $6622 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 4% simple interest.
(3) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(4) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 8% simple interest?
(5) Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 4 years.
(6) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 10% simple interest?
(7) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 5% simple interest.
(8) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 7% simple interest.
(9) How much loan did Ronald borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9375 to clear it?
(10) If Susan paid $4380 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.