Question:
If Karen borrowed $3950 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$4187
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 3% × 2
= $3950 ×3/100 × 2
= 3950 × 3 × 2/100
= 11850 × 2/100
= 23700/100
= $237
Thus, Simple Interest = $237
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 + $237
= $4187
Thus, Amount to be paid = $4187 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) = 3%
And, Time (t) = 2 years
Thus, Amount (A)
= $3950 + ($3950 × 3% × 2)
= $3950 + ($3950 ×3/100 × 2)
= $3950 + (3950 × 3 × 2/100)
= $3950 + (11850 × 2/100)
= $3950 + (23700/100)
= $3950 + $237 = $4187
Thus, Amount (A) to be paid = $4187 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 $3950, the simple interest in 1 year
= 3/100 × 3950
= 3 × 3950/100
= 11850/100 = $118.5
Thus, simple interest for 1 year = $118.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $118.5 × 2 = $237
Thus, Simple Interest (SI) = $237
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $237
= $4187
Thus, Amount to be paid = $4187 Answer
Similar Questions
(1) If John borrowed $3200 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(2) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Sarah borrowed a sum of $3850 at 10% simple interest for 3 years.
(4) Find the amount to be paid if Susan borrowed a sum of $5650 at 5% simple interest for 7 years.
(5) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $5848 to clear the loan, then find the time period of the loan.
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 3% simple interest?
(7) Kimberly had to pay $4929 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) Matthew took a loan of $6400 at the rate of 10% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(9) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8682.5 to clear it?
(10) If Jessica paid $4200 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.