Simple Interest
Math MCQs

Question :    If Karen borrowed $3950 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.

Correct Answer  $4187

Solution & Explanation

Solution

Given,

Principal (P) = $3950

Rate of Simple Interest (SI) = 3%

Time (t) = 2 years

Thus, Amount (A) = ?

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

Thus, here 3% simple interest means, Rate of Simple Interest (SI) is 3% 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 × 3% × 2

= $3950 ׳/₁₀₀ × 2

= ^{3950 × 3 × 2}/₁₀₀

= ^{11850 × 2}/₁₀₀

= ²³⁷⁰⁰/₁₀₀

= $237

Thus, Simple Interest = $237

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 + $237

= $4187

Thus, Amount to be paid = $4187 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) = 3%

And, Time (t) = 2 years

Thus, Amount (A)

= $3950 + ($3950 × 3% × 2)

= $3950 + ($3950 ׳/₁₀₀ × 2)

= $3950 + (^{3950 × 3 × 2}/₁₀₀)

= $3950 + (^{11850 × 2}/₁₀₀)

= $3950 + (²³⁷⁰⁰/₁₀₀)

= $3950 + $237 = $4187

Thus, Amount (A) to be paid = $4187 Answer

Method (3) Unitary Method

Calculation of Amount using Unitary Method

Calculation of Interest using Unitary Method

Here, given Rate of Simple Interest = 3%

This, means, $3 per $100 per year

∵ For $100, the simple interest for 1 year = $3

∴ For $1, the simple interest for 1 year = ³/₁₀₀

∴ For $3950, the simple interest in 1 year

= ³/₁₀₀ × 3950

= ^{3 × 3950}/₁₀₀

= ¹¹⁸⁵⁰/₁₀₀ = $118.5

Thus, simple interest for 1 year = $118.5

Therefore, simple interest for 2 years

= Simple interest for 1 year × 2

= $118.5 × 2 = $237

Thus, Simple Interest (SI) = $237

Calculation of Amount

Amount = Principal + Interest

Thus, Amount = $3950 + $237

= $4187

Thus, Amount to be paid = $4187 Answer

Similar Questions

(1) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 3% simple interest?

(2) Margaret had to pay $5002.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.

(3) Anthony had to pay $4558 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.

(4) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $11050 to clear the loan, then find the time period of the loan.

(5) How much loan did Daniel borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6710 to clear it?

(6) If Mark paid $4928 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.

(7) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $10080 to clear the loan, then find the time period of the loan.

(8) If Ashley paid $5278 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.

(9) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $9350 to clear the loan, then find the time period of the loan.

(10) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 10% simple interest?