Question:
If William borrowed $3500 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$3710
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 3%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 3% simple interest means, Rate of Simple Interest (SI) is 3% 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) = $3500 × 3% × 2
= $3500 ×3/100 × 2
= 3500 × 3 × 2/100
= 10500 × 2/100
= 21000/100
= $210
Thus, Simple Interest = $210
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 = $3500 + $210
= $3710
Thus, Amount to be paid = $3710 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 = $3500
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 2 years
Thus, Amount (A)
= $3500 + ($3500 × 3% × 2)
= $3500 + ($3500 ×3/100 × 2)
= $3500 + (3500 × 3 × 2/100)
= $3500 + (10500 × 2/100)
= $3500 + (21000/100)
= $3500 + $210 = $3710
Thus, Amount (A) to be paid = $3710 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 3%
This, means, $3 per $100 per year
∵ For $100, the simple interest for 1 year = $3
∴ For $1, the simple interest for 1 year = 3/100
∴ For $3500, the simple interest in 1 year
= 3/100 × 3500
= 3 × 3500/100
= 10500/100 = $105
Thus, simple interest for 1 year = $105
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $105 × 2 = $210
Thus, Simple Interest (SI) = $210
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $210
= $3710
Thus, Amount to be paid = $3710 Answer
Similar Questions
(1) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $8145 to clear the loan, then find the time period of the loan.
(2) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8493 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 4 years.
(4) Barbara took a loan of $5100 at the rate of 9% simple interest per annum. If he paid an amount of $9690 to clear the loan, then find the time period of the loan.
(5) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 6% simple interest?
(6) In how much time a principal of $3000 will amount to $3360 at a simple interest of 4% per annum?
(7) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.
(8) What amount does David have to pay after 6 years if he takes a loan of $3400 at 8% simple interest?
(9) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 8% simple interest?
(10) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 9% simple interest.