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) What amount does John have to pay after 6 years if he takes a loan of $3200 at 10% simple interest?
(2) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $7696 to clear the loan, then find the time period of the loan.
(3) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 5% simple interest?
(4) Sandra took a loan of $6900 at the rate of 6% simple interest per annum. If he paid an amount of $11040 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 3% simple interest.
(6) Calculate the amount due if Joseph borrowed a sum of $3700 at 5% simple interest for 3 years.
(7) Find the amount to be paid if Karen borrowed a sum of $5950 at 2% simple interest for 7 years.
(8) How much loan did Timothy borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8140 to clear it?
(9) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 7% simple interest?
(10) James took a loan of $4000 at the rate of 10% simple interest per annum. If he paid an amount of $6400 to clear the loan, then find the time period of the loan.