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) 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.
(2) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 4% simple interest?
(3) Find the amount to be paid if Jessica borrowed a sum of $5750 at 9% simple interest for 8 years.
(4) How much loan did Richard borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6440 to clear it?
(5) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7100 to clear the loan, then find the time period of the loan.
(6) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 2% simple interest?
(7) Calculate the amount due if Karen borrowed a sum of $3950 at 2% simple interest for 3 years.
(8) Find the amount to be paid if Richard borrowed a sum of $5600 at 3% simple interest for 7 years.
(9) Patricia took a loan of $4300 at the rate of 10% simple interest per annum. If he paid an amount of $6880 to clear the loan, then find the time period of the loan.
(10) Richard took a loan of $5200 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.