Question:
If Karen borrowed $3950 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$4108
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 2% × 2
= $3950 ×2/100 × 2
= 3950 × 2 × 2/100
= 7900 × 2/100
= 15800/100
= $158
Thus, Simple Interest = $158
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 = $3950 + $158
= $4108
Thus, Amount to be paid = $4108 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 = $3950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 2 years
Thus, Amount (A)
= $3950 + ($3950 × 2% × 2)
= $3950 + ($3950 ×2/100 × 2)
= $3950 + (3950 × 2 × 2/100)
= $3950 + (7900 × 2/100)
= $3950 + (15800/100)
= $3950 + $158 = $4108
Thus, Amount (A) to be paid = $4108 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 $3950, the simple interest in 1 year
= 2/100 × 3950
= 2 × 3950/100
= 7900/100 = $79
Thus, simple interest in 1 year = $79
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $79 × 2 = $158
Thus, Simple Interest (SI) = $158
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $158
= $4108
Thus, Amount to be paid = $4108 Answer
Similar Questions
(1) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 8% simple interest?
(2) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 9% simple interest.
(3) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 8 years.
(4) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 2% simple interest?
(5) If Patricia paid $3654 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 2% simple interest for 8 years.
(7) Calculate the amount due if William borrowed a sum of $3500 at 7% simple interest for 3 years.
(8) Lisa took a loan of $6100 at the rate of 9% simple interest per annum. If he paid an amount of $11590 to clear the loan, then find the time period of the loan.
(9) Charles had to pay $4368 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) Sarah had to pay $4196.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.