Simple Interest
Math MCQs

Question :    What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 4% simple interest?

Correct Answer  $4740

Solution & Explanation

Solution

Given,

Principal (P) = $3950

Rate of Simple Interest (SI) = 4%

Time (t) = 5 years

Thus, Amount (A) = ?

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

Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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 × 4% × 5

= $3950 ×⁴/₁₀₀ × 5

= ^{3950 × 4 × 5}/₁₀₀

= ^{15800 × 5}/₁₀₀

= ⁷⁹⁰⁰⁰/₁₀₀

= $790

Thus, Simple Interest = $790

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 + $790

= $4740

Thus, Amount to be paid = $4740 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) = 4%

And, Time (t) = 5 years

Thus, Amount (A)

= $3950 + ($3950 × 4% × 5)

= $3950 + ($3950 ×⁴/₁₀₀ × 5)

= $3950 + (^{3950 × 4 × 5}/₁₀₀)

= $3950 + (^{15800 × 5}/₁₀₀)

= $3950 + (⁷⁹⁰⁰⁰/₁₀₀)

= $3950 + $790 = $4740

Thus, Amount (A) to be paid = $4740 Answer

Method (3) Unitary Method

Calculation of Amount using Unitary Method

Calculation of Interest using Unitary Method

Here, given Rate of Simple Interest = 4%

This, means, $4 per $100 per year

∵ For $100, the simple interest for 1 year = $4

∴ For $1, the simple interest for 1 year = ⁴/₁₀₀

∴ For $3950, the simple interest in 1 year

= ⁴/₁₀₀ × 3950

= ^{4 × 3950}/₁₀₀

= ¹⁵⁸⁰⁰/₁₀₀ = $158

Thus, simple interest for 1 year = $158

Therefore, simple interest for 5 years

= Simple interest for 1 year × 5

= $158 × 5 = $790

Thus, Simple Interest (SI) = $790

Calculation of Amount

Amount = Principal + Interest

Thus, Amount = $3950 + $790

= $4740

Thus, Amount to be paid = $4740 Answer

Similar Questions

(1) Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 8 years.

(2) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $10620 to clear the loan, then find the time period of the loan.

(3) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $8313 to clear the loan, then find the time period of the loan.

(4) Calculate the amount due if Sarah borrowed a sum of $3850 at 9% simple interest for 4 years.

(5) How much loan did Amanda borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8937.5 to clear it?

(6) In how much time a principal of $3150 will amount to $3402 at a simple interest of 2% per annum?

(7) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $7084 to clear the loan, then find the time period of the loan.

(8) If Elizabeth paid $3726 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.

(9) Calculate the amount due if Jessica borrowed a sum of $3750 at 5% simple interest for 3 years.

(10) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 2% simple interest for 8 years.