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) If James paid $3480 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(2) Find the amount to be paid if Linda borrowed a sum of $5350 at 7% simple interest for 7 years.
(3) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 2% simple interest for 8 years.
(4) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 3% simple interest.
(5) Michael took a loan of $4600 at the rate of 8% simple interest per annum. If he paid an amount of $7912 to clear the loan, then find the time period of the loan.
(6) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Michael borrowed a sum of $3300 at 4% simple interest for 3 years.
(8) Find the amount to be paid if Susan borrowed a sum of $5650 at 3% simple interest for 8 years.
(9) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(10) Calculate the amount due if John borrowed a sum of $3200 at 10% simple interest for 4 years.