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) If Daniel paid $4920 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $7790 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 3 years.
(4) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 8% simple interest?
(5) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7310 to clear the loan, then find the time period of the loan.
(6) What amount does James have to pay after 6 years if he takes a loan of $3000 at 4% simple interest?
(7) Find the amount to be paid if Linda borrowed a sum of $5350 at 9% simple interest for 7 years.
(8) What amount does David have to pay after 5 years if he takes a loan of $3400 at 7% simple interest?
(9) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(10) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 7% simple interest?