Question:
If Elizabeth borrowed $3450 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3588
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 2% × 2
= $3450 ×2/100 × 2
= 3450 × 2 × 2/100
= 6900 × 2/100
= 13800/100
= $138
Thus, Simple Interest = $138
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 = $3450 + $138
= $3588
Thus, Amount to be paid = $3588 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 = $3450
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3450 + ($3450 × 2% × 2)
= $3450 + ($3450 ×2/100 × 2)
= $3450 + (3450 × 2 × 2/100)
= $3450 + (6900 × 2/100)
= $3450 + (13800/100)
= $3450 + $138 = $3588
Thus, Amount (A) to be paid = $3588 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 $3450, the simple interest in 1 year
= 2/100 × 3450
= 2 × 3450/100
= 6900/100 = $69
Thus, simple interest in 1 year = $69
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $69 × 2 = $138
Thus, Simple Interest (SI) = $138
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $138
= $3588
Thus, Amount to be paid = $3588 Answer
Similar Questions
(1) How much loan did Laura borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9812.5 to clear it?
(2) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.
(3) Christopher took a loan of $6000 at the rate of 8% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(4) How much loan did George borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8760 to clear it?
(5) Calculate the amount due if Jessica borrowed a sum of $3750 at 7% simple interest for 3 years.
(6) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $10269 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if Richard borrowed a sum of $5600 at 10% simple interest for 7 years.
(8) David took a loan of $4800 at the rate of 10% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.
(9) How much loan did Joshua borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7590 to clear it?
(10) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 10% simple interest.