mcqs Math Simple Interest Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan. 7924

Question: Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.

(A)  7.5
(B)  12.5
(C)  10
(D)  15

Correct Answer 10

Solution And Explanation

Solution

Given,

Principal (P) = $7000

Rate of Simple Interest (R) = 6% per annum

Amount (A) = $11200

Thus, time (T) = ?

Method (1) Using Formula

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

⇒ Simple Interest (SI) = Amount – Principal

⇒ SI = $11200 – $7000 = $4200

Thus, Simple Interest = $4200

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

⇒ T = ^{100 × SI}/_{P × R}

Thus, Time (T) = ^{100 × 4200}/_{7000 × 6}

= ⁴²⁰⁰⁰⁰/₄₂₀₀₀

= 10 years (using formula)

Thus, Time (T) = 10 years (from time taken before calculation)Answer

Here, we have

Principal (P) = $7000

Rate of Simple Interest (R) = 6% per annum

Simple Interest = $4200 (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 = 6% of Principal

= 6% of $7000

= ⁶/₁₀₀ × 7000

= ^{6 × 7000}/₁₀₀

= ⁴²⁰⁰⁰/₁₀₀ = 420

Thus, simple Interest for 1 year = $420

Now,

∵ If the simple Interest is $420, then the time = 1 year

∴ If the simple Interest is $1, then the time = ¹/₄₂₀ years

∴ If the simple Interest is $4200, then the time = ¹/₄₂₀ × 4200 years

= ^{1 × 4200}/₄₂₀ years

= ⁴²⁰⁰/₄₂₀ = 10 years

Thus, time (T) = 10 years Answer