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) In how much time a principal of $3100 will amount to $3720 at a simple interest of 4% per annum?
(2) How much loan did Kevin borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8520 to clear it?
(3) Charles took a loan of $5800 at the rate of 6% simple interest per annum. If he paid an amount of $8932 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 9% simple interest.
(5) Donna had to pay $5577.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(6) William took a loan of $5000 at the rate of 10% simple interest per annum. If he paid an amount of $9500 to clear the loan, then find the time period of the loan.
(7) Robert took a loan of $4200 at the rate of 10% simple interest per annum. If he paid an amount of $8400 to clear the loan, then find the time period of the loan.
(8) Sarah took a loan of $5700 at the rate of 9% simple interest per annum. If he paid an amount of $9804 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if William borrowed a sum of $3250 at a 4% simple interest?
(10) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 2% simple interest?