Question:
Donald took a loan of $7000 at the rate of 7% simple interest per annum. If he paid an amount of $10430 to clear the loan, then find the time period of the loan.
Correct Answer
7
Solution And Explanation
Solution
Given,
Principal (P) = $7000
Rate of Simple Interest (R) = 7% per annum
Amount (A) = $10430
Thus, time (T) = ?
Method (1) Using Formula
Calculation of Simple Interest, when Principal and Amount are givenFormual to Calculate Simple Interest when Principal and Amount are given
We know that, Amount (A) = Principal (P) + Simple Interest (SI)
⇒ Simple Interest (SI) = Amount – Principal
⇒ SI = $10430 – $7000 = $3430
Thus, Simple Interest = $3430
Calculation of the Time using forumula when Amount, Simple Interest and Principal are known
Formula to find the Time (T)
Time (T) = 100 × Simple Interest/Principal × Rate of Interest
⇒ T = 100 × SI/P × R
Thus, Time (T) = 100 × 3430/7000 × 7
= 343000/49000
= 7 years (using formula)
Thus, Time (T) = 7 years (from time taken before calculation)Answer
Calculation of the Time using Unitary Method when Amount, Simple Interest and Principal are known
Here, we have
Principal (P) = $7000
Rate of Simple Interest (R) = 7% per annum
Simple Interest = $3430 (As calculated above by subtracting Principal from the Amount given)
We know that, interest is calculated on the basis of the Principal.
This means Simple Interest for 1 year = Rate of simple interest × Principal
Thus, Simple Interest for 1 year = 7% of Principal
= 7% of $7000
= 7/100 × 7000
= 7 × 7000/100
= 49000/100 = 490
Thus, simple Interest for 1 year = $490
Now,
∵ If the simple Interest is $490, then the time = 1 year
∴ If the simple Interest is $1, then the time = 1/490 years
∴ If the simple Interest is $3430, then the time = 1/490 × 3430 years
= 1 × 3430/490 years
= 3430/490 = 7 years
Thus, time (T) = 7 years Answer
Similar Questions
(1) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 4% simple interest.
(2) If Lisa paid $4536 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(3) David took a loan of $4800 at the rate of 6% simple interest per annum. If he paid an amount of $7392 to clear the loan, then find the time period of the loan.
(4) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8750 to clear it?
(5) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $11524 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Sarah borrowed a sum of $3850 at 5% simple interest for 4 years.
(7) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 7 years.
(8) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 10% simple interest?
(9) How much loan did Sandra borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7417.5 to clear it?
(10) If Donna paid $5432 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.