Question:
Donald took a loan of $7000 at the rate of 7% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.
Correct Answer
8
Solution And Explanation
Solution
Given,
Principal (P) = $7000
Rate of Simple Interest (R) = 7% per annum
Amount (A) = $10920
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 = $10920 – $7000 = $3920
Thus, Simple Interest = $3920
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 × 3920/7000 × 7
= 392000/49000
= 8 years (using formula)
Thus, Time (T) = 8 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 = $3920 (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 $3920, then the time = 1/490 × 3920 years
= 1 × 3920/490 years
= 3920/490 = 8 years
Thus, time (T) = 8 years Answer
Similar Questions
(1) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 8% simple interest.
(2) How much loan did Cynthia borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9540 to clear it?
(3) How much loan did Melissa borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8085 to clear it?
(4) If Donna paid $5626 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(5) Patricia took a loan of $4300 at the rate of 10% simple interest per annum. If he paid an amount of $8170 to clear the loan, then find the time period of the loan.
(6) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $10660 to clear the loan, then find the time period of the loan.
(7) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 10% simple interest?
(8) Calculate the amount due if Barbara borrowed a sum of $3550 at 9% simple interest for 3 years.
(9) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 10% simple interest?
(10) Mark had to pay $4796 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.