Simple Interest
Math MCQs

Question :    If Karen borrowed $3950 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.

Correct Answer  $4108

Solution & Explanation

Solution

Given,

Principal (P) = $3950

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) = $3950 × 2% × 2

= $3950 ײ/₁₀₀ × 2

= ^{3950 × 2 × 2}/₁₀₀

= ^{7900 × 2}/₁₀₀

= ¹⁵⁸⁰⁰/₁₀₀

= $158

Thus, Simple Interest = $158

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 = $3950 + $158

= $4108

Thus, Amount to be paid = $4108 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 = $3950

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

And, Time (t) = 2 years

Thus, Amount (A)

= $3950 + ($3950 × 2% × 2)

= $3950 + ($3950 ײ/₁₀₀ × 2)

= $3950 + (^{3950 × 2 × 2}/₁₀₀)

= $3950 + (^{7900 × 2}/₁₀₀)

= $3950 + (¹⁵⁸⁰⁰/₁₀₀)

= $3950 + $158 = $4108

Thus, Amount (A) to be paid = $4108 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 $3950, the simple interest in 1 year

= ²/₁₀₀ × 3950

= ^{2 × 3950}/₁₀₀

= ⁷⁹⁰⁰/₁₀₀ = $79

Thus, simple interest in 1 year = $79

Therefore, simple interest for 2 years

= Simple interest for 1 year × 2

= $79 × 2 = $158

Thus, Simple Interest (SI) = $158

Calculation of Amount

Amount = Principal + Interest

Thus, Amount = $3950 + $158

= $4108

Thus, Amount to be paid = $4108 Answer

Similar Questions

(1) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 2% simple interest.

(2) How much loan did David borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5940 to clear it?

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

(4) 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.

(5) Nancy took a loan of $6300 at the rate of 8% simple interest per annum. If he paid an amount of $10332 to clear the loan, then find the time period of the loan.

(6) Jessica had to pay $4200 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.

(7) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 4% simple interest.

(8) How much loan did Patricia borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5922.5 to clear it?

(9) How much loan did Donna borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7535 to clear it?

(10) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 9% simple interest?