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) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 6% simple interest.
(2) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Charles borrowed a sum of $5900 at 4% simple interest for 7 years.
(4) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 5% simple interest?
(5) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 8% simple interest.
(6) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $8460 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Thomas borrowed a sum of $3800 at 8% simple interest for 4 years.
(8) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 9% simple interest for 8 years.
(9) If Christopher paid $4480 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(10) If David paid $3808 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.