Simple Interest
Math MCQs

Question :    Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 2% simple interest.

Correct Answer  $6000

Solution & Explanation

Solution

Given,

Principal (P) = $5000

Rate of Simple Interest (SI) = 2%

Time (t) = 10 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) = $5000 × 2% × 10

= $5000 ײ/₁₀₀ × 10

= ^{5000 × 2 × 10}/₁₀₀

= ^{10000 × 10}/₁₀₀

= ¹⁰⁰⁰⁰⁰/₁₀₀

= $1000

Thus, Simple Interest = $1000

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 = $5000 + $1000

= $6000

Thus, Amount to be paid = $6000 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 = $5000

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

And, Time (t) = 10 years

Thus, Amount (A)

= $5000 + ($5000 × 2% × 10)

= $5000 + ($5000 ײ/₁₀₀ × 10)

= $5000 + (^{5000 × 2 × 10}/₁₀₀)

= $5000 + (^{10000 × 10}/₁₀₀)

= $5000 + (¹⁰⁰⁰⁰⁰/₁₀₀)

= $5000 + $1000 = $6000

Thus, Amount (A) to be paid = $6000 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 for 1 year = $2

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

∴ For $5000, the simple interest in 1 year

= ²/₁₀₀ × 5000

= ^{2 × 5000}/₁₀₀

= ¹⁰⁰⁰⁰/₁₀₀ = $100

Thus, simple interest for 1 year = $100

Therefore, simple interest for 10 years

= Simple interest for 1 year × 10

= $100 × 10 = $1000

Thus, Simple Interest (SI) = $1000

Calculation of Amount

Amount = Principal + Interest

Thus, Amount = $5000 + $1000

= $6000

Thus, Amount to be paid = $6000 Answer

Similar Questions

(1) How much loan did William borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6875 to clear it?

(2) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $7740 to clear the loan, then find the time period of the loan.

(3) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $9128 to clear the loan, then find the time period of the loan.

(4) If Charles borrowed $3900 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.

(5) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.

(6) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 4% simple interest?

(7) Find the amount to be paid if Robert borrowed a sum of $5100 at 8% simple interest for 7 years.

(8) If Donald paid $5220 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.

(9) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $9672 to clear the loan, then find the time period of the loan.

(10) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $8268 to clear the loan, then find the time period of the loan.