Question:
If James borrowed $3000 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3120
Solution And Explanation
Solution
Given,
Principal (P) = $3000
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) = $3000 × 2% × 2
= $3000 ×2/100 × 2
= 3000 × 2 × 2/100
= 6000 × 2/100
= 12000/100
= $120
Thus, Simple Interest = $120
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 = $3000 + $120
= $3120
Thus, Amount to be paid = $3120 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 = $3000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3000 + ($3000 × 2% × 2)
= $3000 + ($3000 ×2/100 × 2)
= $3000 + (3000 × 2 × 2/100)
= $3000 + (6000 × 2/100)
= $3000 + (12000/100)
= $3000 + $120 = $3120
Thus, Amount (A) to be paid = $3120 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 $3000, the simple interest in 1 year
= 2/100 × 3000
= 2 × 3000/100
= 6000/100 = $60
Thus, simple interest in 1 year = $60
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $60 × 2 = $120
Thus, Simple Interest (SI) = $120
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $120
= $3120
Thus, Amount to be paid = $3120 Answer
Similar Questions
(1) Find the amount to be paid if James borrowed a sum of $5000 at 6% simple interest for 8 years.
(2) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7450 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Barbara borrowed a sum of $3550 at 8% simple interest for 4 years.
(4) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 5% simple interest for 4 years.
(5) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 6% simple interest.
(6) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $9310 to clear the loan, then find the time period of the loan.
(7) If Joseph paid $4144 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(8) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $9984 to clear the loan, then find the time period of the loan.
(9) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $7800 to clear the loan, then find the time period of the loan.
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 4% simple interest?