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) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 4% simple interest?
(2) How much loan did Deborah borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8195 to clear it?
(3) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 10% simple interest?
(4) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 6% simple interest?
(5) Sarah took a loan of $5700 at the rate of 8% simple interest per annum. If he paid an amount of $8892 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Jessica borrowed a sum of $5750 at 8% simple interest for 7 years.
(7) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 8% simple interest.
(8) In how much time a principal of $3150 will amount to $3528 at a simple interest of 4% per annum?
(9) How much loan did Sharon borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9300 to clear it?
(10) If Nancy paid $4482 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.