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) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 8% simple interest?
(2) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 8% simple interest.
(3) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $11880 to clear the loan, then find the time period of the loan.
(4) How much loan did Mark borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7680 to clear it?
(5) Michael had to pay $3498 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(6) In how much time a principal of $3200 will amount to $3584 at a simple interest of 3% per annum?
(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 6% simple interest?
(8) How much loan did Ashley borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7860 to clear it?
(9) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 4% simple interest?
(10) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 7% simple interest.