Question:
If Jennifer borrowed $3250 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3380
Solution And Explanation
Solution
Given,
Principal (P) = $3250
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) = $3250 × 2% × 2
= $3250 ×2/100 × 2
= 3250 × 2 × 2/100
= 6500 × 2/100
= 13000/100
= $130
Thus, Simple Interest = $130
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 = $3250 + $130
= $3380
Thus, Amount to be paid = $3380 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 = $3250
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3250 + ($3250 × 2% × 2)
= $3250 + ($3250 ×2/100 × 2)
= $3250 + (3250 × 2 × 2/100)
= $3250 + (6500 × 2/100)
= $3250 + (13000/100)
= $3250 + $130 = $3380
Thus, Amount (A) to be paid = $3380 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 $3250, the simple interest in 1 year
= 2/100 × 3250
= 2 × 3250/100
= 6500/100 = $65
Thus, simple interest in 1 year = $65
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $65 × 2 = $130
Thus, Simple Interest (SI) = $130
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3250 + $130
= $3380
Thus, Amount to be paid = $3380 Answer
Similar Questions
(1) Kimberly had to pay $4929 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 9% simple interest.
(3) If David paid $4080 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) If Michael paid $3828 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(5) What amount does William have to pay after 6 years if he takes a loan of $3500 at 9% simple interest?
(6) How much loan did Emily borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8437.5 to clear it?
(7) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(8) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $7987 to clear the loan, then find the time period of the loan.
(9) How much loan did James borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5500 to clear it?
(10) Calculate the amount due if Susan borrowed a sum of $3650 at 8% simple interest for 3 years.