Question:
If Jessica borrowed $3750 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3900
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 2% × 2
= $3750 ×2/100 × 2
= 3750 × 2 × 2/100
= 7500 × 2/100
= 15000/100
= $150
Thus, Simple Interest = $150
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 = $3750 + $150
= $3900
Thus, Amount to be paid = $3900 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 = $3750
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3750 + ($3750 × 2% × 2)
= $3750 + ($3750 ×2/100 × 2)
= $3750 + (3750 × 2 × 2/100)
= $3750 + (7500 × 2/100)
= $3750 + (15000/100)
= $3750 + $150 = $3900
Thus, Amount (A) to be paid = $3900 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 $3750, the simple interest in 1 year
= 2/100 × 3750
= 2 × 3750/100
= 7500/100 = $75
Thus, simple interest in 1 year = $75
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $75 × 2 = $150
Thus, Simple Interest (SI) = $150
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $150
= $3900
Thus, Amount to be paid = $3900 Answer
Similar Questions
(1) Calculate the amount due if James borrowed a sum of $3000 at 7% simple interest for 4 years.
(2) Calculate the amount due if David borrowed a sum of $3400 at 10% simple interest for 4 years.
(3) Find the amount to be paid if David borrowed a sum of $5400 at 10% simple interest for 8 years.
(4) How much loan did Deborah borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8567.5 to clear it?
(5) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 8% simple interest.
(6) If Daniel paid $4592 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 7% simple interest?
(8) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 10% simple interest.
(9) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 8% simple interest?
(10) Elizabeth took a loan of $4900 at the rate of 6% simple interest per annum. If he paid an amount of $7840 to clear the loan, then find the time period of the loan.