Question

On a certain sum the interest paid after 3 years is 450 at 5 % rate of interest per annum.

Find the sum.

Answer 1

$3000

Explanation:

let the inital sum be x

final amount = initial sum + interest = (450 + x)

given that annual interest rate = 5% = 0.05 and time = 3 years

recall that for simple interest

A = P(1 + rt)

where

A = final amount = (450 + x)

P = inital sum = x

r = interest rate = 5% = 0.05

t = time = 3 years

Substituting values into equation

(450 + x) = x [ 1 + (3)(0.05) ]

(450 + x) = x [ 1 + 0.15 ]

(450 + x) = x (1.15)

450 + x = 1.15x

1.15x - x = 450

0.15x = 450

x = 450/0.15 = $3000