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) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $11410 to clear the loan, then find the time period of the loan.
(2) 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.
(3) What amount will be due after 2 years if James borrowed a sum of $3000 at a 9% simple interest?
(4) Find the amount to be paid if James borrowed a sum of $5000 at 10% simple interest for 8 years.
(5) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 8 years.
(6) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 7% simple interest?
(7) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $7332 to clear the loan, then find the time period of the loan.
(8) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 3% simple interest?
(9) Calculate the amount due if James borrowed a sum of $3000 at 10% simple interest for 4 years.
(10) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $5822 to clear the loan, then find the time period of the loan.