Question:
How much loan did Edward borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8740 to clear it?
Correct Answer
$7600
Solution And Explanation
Solution
Given,
Amount (A) = $8740
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
$8740 = P (1 + 3% × 5)
⇒ $8740 = P (1 + 3/100 × 5)
⇒ $8740 = P (1 + 3 × 5/100)
⇒ $8740 = P (1 + 15/100)
⇒ $8740 = P (100 + 15/100)
⇒ $8740 = P × 115/100
⇒ P × 115/100 = $8740
⇒ P = 8740/115/100
⇒ P = 8740 × 100/115
⇒ P = 8740 × 100/115
⇒ P = 874000/115
⇒ P = $7600
Thus, the sum borrowed (P) = $7600 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 8740, then the Principal = 100/115 × 8740
= 100 × 8740/115
= 874000/115
= 7600
Thus, Principal = $7600
Thus, the sum borrowed = $7600 Answer
Similar Questions
(1) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $8800 to clear the loan, then find the time period of the loan.
(2) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 4% simple interest?
(3) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 10% simple interest.
(4) How much loan did Thomas borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6380 to clear it?
(5) Calculate the amount due if Joseph borrowed a sum of $3700 at 3% simple interest for 4 years.
(6) Find the amount to be paid if John borrowed a sum of $5200 at 10% simple interest for 8 years.
(7) If Andrew paid $5568 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) Daniel took a loan of $6200 at the rate of 10% simple interest per annum. If he paid an amount of $12400 to clear the loan, then find the time period of the loan.
(9) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $6956 to clear the loan, then find the time period of the loan.
(10) What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 7% simple interest?