Question:
If Joseph borrowed $3700 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3848
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 2% × 2
= $3700 ×2/100 × 2
= 3700 × 2 × 2/100
= 7400 × 2/100
= 14800/100
= $148
Thus, Simple Interest = $148
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 = $3700 + $148
= $3848
Thus, Amount to be paid = $3848 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 = $3700
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3700 + ($3700 × 2% × 2)
= $3700 + ($3700 ×2/100 × 2)
= $3700 + (3700 × 2 × 2/100)
= $3700 + (7400 × 2/100)
= $3700 + (14800/100)
= $3700 + $148 = $3848
Thus, Amount (A) to be paid = $3848 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 $3700, the simple interest in 1 year
= 2/100 × 3700
= 2 × 3700/100
= 7400/100 = $74
Thus, simple interest in 1 year = $74
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $74 × 2 = $148
Thus, Simple Interest (SI) = $148
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $148
= $3848
Thus, Amount to be paid = $3848 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 7% simple interest.
(2) In how much time a principal of $3150 will amount to $3780 at a simple interest of 5% per annum?
(3) Sandra had to pay $4984 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Linda borrowed a sum of $3350 at 7% simple interest for 3 years.
(6) How much loan did Ryan borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9875 to clear it?
(7) Donald had to pay $5175 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(8) What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 5% simple interest?
(9) Calculate the amount due if Susan borrowed a sum of $3650 at 7% simple interest for 4 years.
(10) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.