Question:
If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$4004
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 2% × 2
= $3850 ×2/100 × 2
= 3850 × 2 × 2/100
= 7700 × 2/100
= 15400/100
= $154
Thus, Simple Interest = $154
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 = $3850 + $154
= $4004
Thus, Amount to be paid = $4004 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 = $3850
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3850 + ($3850 × 2% × 2)
= $3850 + ($3850 ×2/100 × 2)
= $3850 + (3850 × 2 × 2/100)
= $3850 + (7700 × 2/100)
= $3850 + (15400/100)
= $3850 + $154 = $4004
Thus, Amount (A) to be paid = $4004 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 $3850, the simple interest in 1 year
= 2/100 × 3850
= 2 × 3850/100
= 7700/100 = $77
Thus, simple interest in 1 year = $77
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $77 × 2 = $154
Thus, Simple Interest (SI) = $154
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $154
= $4004
Thus, Amount to be paid = $4004 Answer
Similar Questions
(1) Calculate the amount due if Christopher borrowed a sum of $4000 at 9% simple interest for 4 years.
(2) What amount does William have to pay after 6 years if he takes a loan of $3500 at 8% simple interest?
(3) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $9460 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Christopher borrowed a sum of $4000 at 8% simple interest for 4 years.
(5) Charles took a loan of $5800 at the rate of 9% simple interest per annum. If he paid an amount of $10498 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if John borrowed a sum of $3200 at 10% simple interest for 4 years.
(7) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 7% simple interest?
(8) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 8% simple interest for 4 years.
(9) Donna had to pay $5432 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) Find the amount to be paid if James borrowed a sum of $5000 at 9% simple interest for 7 years.