Question:
If David borrowed $3400 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3536
Solution And Explanation
Solution
Given,
Principal (P) = $3400
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) = $3400 × 2% × 2
= $3400 ×2/100 × 2
= 3400 × 2 × 2/100
= 6800 × 2/100
= 13600/100
= $136
Thus, Simple Interest = $136
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 = $3400 + $136
= $3536
Thus, Amount to be paid = $3536 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 = $3400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3400 + ($3400 × 2% × 2)
= $3400 + ($3400 ×2/100 × 2)
= $3400 + (3400 × 2 × 2/100)
= $3400 + (6800 × 2/100)
= $3400 + (13600/100)
= $3400 + $136 = $3536
Thus, Amount (A) to be paid = $3536 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 $3400, the simple interest in 1 year
= 2/100 × 3400
= 2 × 3400/100
= 6800/100 = $68
Thus, simple interest in 1 year = $68
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $68 × 2 = $136
Thus, Simple Interest (SI) = $136
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $136
= $3536
Thus, Amount to be paid = $3536 Answer
Similar Questions
(1) Calculate the amount due if Barbara borrowed a sum of $3550 at 8% simple interest for 4 years.
(2) In how much time a principal of $3200 will amount to $3488 at a simple interest of 3% per annum?
(3) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $11220 to clear the loan, then find the time period of the loan.
(4) 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.
(5) How much loan did John borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6500 to clear it?
(6) How much loan did Jacob borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $10000 to clear it?
(7) If John paid $3584 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(8) Daniel took a loan of $6200 at the rate of 6% simple interest per annum. If he paid an amount of $8804 to clear the loan, then find the time period of the loan.
(9) How much loan did Thomas borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6670 to clear it?
(10) If Christopher borrowed $4000 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.