Question:
If Christopher borrowed $4000 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
Correct Answer
$4240
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 3% × 2
= $4000 ×3/100 × 2
= 4000 × 3 × 2/100
= 12000 × 2/100
= 24000/100
= $240
Thus, Simple Interest = $240
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 = $4000 + $240
= $4240
Thus, Amount to be paid = $4240 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 = $4000
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 3% × 2)
= $4000 + ($4000 ×3/100 × 2)
= $4000 + (4000 × 3 × 2/100)
= $4000 + (12000 × 2/100)
= $4000 + (24000/100)
= $4000 + $240 = $4240
Thus, Amount (A) to be paid = $4240 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 $4000, the simple interest in 1 year
= 3/100 × 4000
= 3 × 4000/100
= 12000/100 = $120
Thus, simple interest for 1 year = $120
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $120 × 2 = $240
Thus, Simple Interest (SI) = $240
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $240
= $4240
Thus, Amount to be paid = $4240 Answer
Similar Questions
(1) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 6% simple interest?
(2) How much loan did Michelle borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8340 to clear it?
(3) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(4) Find the amount to be paid if Karen borrowed a sum of $5950 at 4% simple interest for 8 years.
(5) Calculate the amount due if Patricia borrowed a sum of $3150 at 10% simple interest for 3 years.
(6) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 5% simple interest?
(7) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8312.5 to clear it?
(8) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 10% simple interest?
(9) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 8% simple interest.
(10) Calculate the amount due if Susan borrowed a sum of $3650 at 4% simple interest for 4 years.