Question:
How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9750 to clear it?
Correct Answer
$7800
Solution And Explanation
Solution
Given,
Amount (A) = $9750
Rate of Simple Interest (R) = 5%
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
$9750 = P (1 + 5% × 5)
⇒ $9750 = P (1 + 5/100 × 5)
⇒ $9750 = P (1 + 5 × 5/100)
⇒ $9750 = P (1 + 25/100)
⇒ $9750 = P (100 + 25/100)
⇒ $9750 = P × 125/100
⇒ P × 125/100 = $9750
⇒ P = 9750/125/100
⇒ P = 9750 × 100/125
⇒ P = 9750 × 100/125
⇒ P = 975000/125
⇒ P = $7800
Thus, the sum borrowed (P) = $7800 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 = 5% per annum
Thus, Interest = 5% of principal
⇒ Interest = 5% of 100 = 5
Thus, Simple Interest for 1 year = 5
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 × 5 = 25
Thus, simple interest for 5 years = 25
Thus, Amount (A) = Principal + Interest
⇒ Amount = 100 + 25 = 125
Calculation of the Principal
Now,
∵ If the Amount is 125, then the Principal = 100
∴ If the Amount is 1, then the Principal = 100/125
∴ If the Amount is 9750, then the Principal = 100/125 × 9750
= 100 × 9750/125
= 975000/125
= 7800
Thus, Principal = $7800
Thus, the sum borrowed = $7800 Answer
Similar Questions
(1) If Donald paid $4860 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(2) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 4% simple interest.
(3) Susan took a loan of $5300 at the rate of 6% simple interest per annum. If he paid an amount of $8480 to clear the loan, then find the time period of the loan.
(4) Charles took a loan of $5800 at the rate of 9% simple interest per annum. If he paid an amount of $10498 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Patricia borrowed a sum of $3150 at 9% simple interest for 4 years.
(6) Daniel had to pay $4469 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(7) If Christopher paid $4320 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(8) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $7140 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 3% simple interest.
(10) Find the amount to be paid if John borrowed a sum of $5200 at 6% simple interest for 7 years.