mcqs Math Simple Interest Michael took a loan of $4600 at the rate of 9% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan. 7528

Question: Michael took a loan of $4600 at the rate of 9% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.

(A)  5.25
(B)  8.75
(C)  7
(D)  10.5

Correct Answer 7

Solution And Explanation

Solution

Given,

Principal (P) = $4600

Rate of Simple Interest (R) = 9% per annum

Amount (A) = $7498

Thus, time (T) = ?

Method (1) Using Formula

We know that, Amount (A) = Principal (P) + Simple Interest (SI)

⇒ Simple Interest (SI) = Amount – Principal

⇒ SI = $7498 – $4600 = $2898

Thus, Simple Interest = $2898

Time (T) = ^{100 × Simple Interest}/_{Principal × Rate of Interest}

⇒ T = ^{100 × SI}/_{P × R}

Thus, Time (T) = ^{100 × 2898}/_{4600 × 9}

= ²⁸⁹⁸⁰⁰/₄₁₄₀₀

= 7 years (using formula)

Thus, Time (T) = 7 years (from time taken before calculation)Answer

Here, we have

Principal (P) = $4600

Rate of Simple Interest (R) = 9% per annum

Simple Interest = $2898 (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 = 9% of Principal

= 9% of $4600

= ⁹/₁₀₀ × 4600

= ^{9 × 4600}/₁₀₀

= ⁴¹⁴⁰⁰/₁₀₀ = 414

Thus, simple Interest for 1 year = $414

Now,

∵ If the simple Interest is $414, then the time = 1 year

∴ If the simple Interest is $1, then the time = ¹/₄₁₄ years

∴ If the simple Interest is $2898, then the time = ¹/₄₁₄ × 2898 years

= ^{1 × 2898}/₄₁₄ years

= ²⁸⁹⁸/₄₁₄ = 7 years

Thus, time (T) = 7 years Answer