Question:
If William borrowed $3500 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3640
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 2% × 2
= $3500 ×2/100 × 2
= 3500 × 2 × 2/100
= 7000 × 2/100
= 14000/100
= $140
Thus, Simple Interest = $140
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 = $3500 + $140
= $3640
Thus, Amount to be paid = $3640 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 = $3500
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3500 + ($3500 × 2% × 2)
= $3500 + ($3500 ×2/100 × 2)
= $3500 + (3500 × 2 × 2/100)
= $3500 + (7000 × 2/100)
= $3500 + (14000/100)
= $3500 + $140 = $3640
Thus, Amount (A) to be paid = $3640 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 $3500, the simple interest in 1 year
= 2/100 × 3500
= 2 × 3500/100
= 7000/100 = $70
Thus, simple interest in 1 year = $70
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $70 × 2 = $140
Thus, Simple Interest (SI) = $140
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $140
= $3640
Thus, Amount to be paid = $3640 Answer
Similar Questions
(1) Calculate the amount due if Karen borrowed a sum of $3950 at 2% simple interest for 4 years.
(2) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 9% simple interest?
(3) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 9% simple interest?
(4) Calculate the amount due if Susan borrowed a sum of $3650 at 8% simple interest for 4 years.
(5) Calculate the amount due if John borrowed a sum of $3200 at 10% simple interest for 4 years.
(6) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8050 to clear it?
(7) Kenneth had to pay $5300 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) If Sandra paid $4806 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Joseph had to pay $4033 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(10) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 6% simple interest.