Question:
If Charles borrowed $3900 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$4056
Solution And Explanation
Solution
Given,
Principal (P) = $3900
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) = $3900 × 2% × 2
= $3900 ×2/100 × 2
= 3900 × 2 × 2/100
= 7800 × 2/100
= 15600/100
= $156
Thus, Simple Interest = $156
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 = $3900 + $156
= $4056
Thus, Amount to be paid = $4056 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 = $3900
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3900 + ($3900 × 2% × 2)
= $3900 + ($3900 ×2/100 × 2)
= $3900 + (3900 × 2 × 2/100)
= $3900 + (7800 × 2/100)
= $3900 + (15600/100)
= $3900 + $156 = $4056
Thus, Amount (A) to be paid = $4056 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 $3900, the simple interest in 1 year
= 2/100 × 3900
= 2 × 3900/100
= 7800/100 = $78
Thus, simple interest in 1 year = $78
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $78 × 2 = $156
Thus, Simple Interest (SI) = $156
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3900 + $156
= $4056
Thus, Amount to be paid = $4056 Answer
Similar Questions
(1) Anthony took a loan of $6600 at the rate of 6% simple interest per annum. If he paid an amount of $8976 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Mary borrowed a sum of $5050 at 10% simple interest for 7 years.
(3) Susan took a loan of $5300 at the rate of 10% simple interest per annum. If he paid an amount of $8480 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if James borrowed a sum of $3000 at 7% simple interest for 3 years.
(5) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(6) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7661 to clear the loan, then find the time period of the loan.
(7) What amount does John have to pay after 6 years if he takes a loan of $3200 at 10% simple interest?
(8) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 4% simple interest?
(9) How much loan did Paul borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7370 to clear it?
(10) Calculate the amount due if Michael borrowed a sum of $3300 at 6% simple interest for 4 years.