Simple Interest
Math MCQs

Question :    If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.

Correct Answer  $4004

Solution & Explanation

Solution

Given,

Principal (P) = $3850

Rate of Simple Interest (SI) = 2%

Time (t) = 2 years

Thus, Amount (A) = ?

The Rate of Interest is always calculated per annum, i.e. per year.

Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% per annum.

Method (1) Using Formula

Calculation of Simple Interest

Formula to Calculate Simple Interest

Simple Interest (SI) = Principal × Rate × Time

Thus, Simple Interest (SI) = $3850 × 2% × 2

= $3850 ײ/₁₀₀ × 2

= ^{3850 × 2 × 2}/₁₀₀

= ^{7700 × 2}/₁₀₀

= ¹⁵⁴⁰⁰/₁₀₀

= $154

Thus, Simple Interest = $154

Calculation of Amount

The total money paid to the lender by a borrower is called the Amount.

In other words, sum of priciple and interest is called the Amount.

Formula to Calculate the Amount

Amount = Principal + Interest

Thus, Amount = $3850 + $154

= $4004

Thus, Amount to be paid = $4004 Answer

Method (2)

Calculation of Amount when Principal, Rate of Simple Interest and Time are given

Calculation of Amount directly using Principal, SI, and Time

Formula to calculate the Amount

Amount (A) = Principal (P) + Principal(P) × Rate of Interest (SI) × Time (t)

⇒ A = P + PRT

Here in the question, P = $3850

Rate of Simple Interest (SI) or (R) = 2%

And, Time (t) = 2 years

Thus, Amount (A)

= $3850 + ($3850 × 2% × 2)

= $3850 + ($3850 ײ/₁₀₀ × 2)

= $3850 + (^{3850 × 2 × 2}/₁₀₀)

= $3850 + (^{7700 × 2}/₁₀₀)

= $3850 + (¹⁵⁴⁰⁰/₁₀₀)

= $3850 + $154 = $4004

Thus, Amount (A) to be paid = $4004 Answer

Method (3) Unitary Method

Calculation of Amount using Unitary Method

Calculation of Interest using Unitary Method

Here, given Rate of Simple Interest = 2%

This, means, $2 per $100 per year

∵ For $100, the simple interest in 1 year = $2

∴ For $1, the simple interest in 1 year = ²/₁₀₀

∴ For $3850, the simple interest in 1 year

= ²/₁₀₀ × 3850

= ^{2 × 3850}/₁₀₀

= ⁷⁷⁰⁰/₁₀₀ = $77

Thus, simple interest in 1 year = $77

Therefore, simple interest for 2 years

= Simple interest for 1 year × 2

= $77 × 2 = $154

Thus, Simple Interest (SI) = $154

Calculation of Amount

Amount = Principal + Interest

Thus, Amount = $3850 + $154

= $4004

Thus, Amount to be paid = $4004 Answer

Similar Questions

(1) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 4% simple interest.

(2) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 8% simple interest.

(3) Michelle had to pay $5692.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.

(4) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.

(5) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8400 to clear it?

(6) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 10% simple interest?

(7) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 5% simple interest for 4 years.

(8) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 9% simple interest.

(9) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $8642 to clear the loan, then find the time period of the loan.

(10) Calculate the amount due if Susan borrowed a sum of $3650 at 5% simple interest for 4 years.