Question:
What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 4% simple interest?
Correct Answer
$3402
Solution And Explanation
Solution
Given,
Principal (P) = $3150
Rate of Simple Interest (SI) = 4%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $3150 × 4% × 2
= $3150 ×4/100 × 2
= 3150 × 4 × 2/100
= 12600 × 2/100
= 25200/100
= $252
Thus, Simple Interest = $252
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 = $3150 + $252
= $3402
Thus, Amount to be paid = $3402 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 = $3150
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 2 years
Thus, Amount (A)
= $3150 + ($3150 × 4% × 2)
= $3150 + ($3150 ×4/100 × 2)
= $3150 + (3150 × 4 × 2/100)
= $3150 + (12600 × 2/100)
= $3150 + (25200/100)
= $3150 + $252 = $3402
Thus, Amount (A) to be paid = $3402 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $3150, the simple interest in 1 year
= 4/100 × 3150
= 4 × 3150/100
= 12600/100 = $126
Thus, simple interest for 1 year = $126
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $126 × 2 = $252
Thus, Simple Interest (SI) = $252
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3150 + $252
= $3402
Thus, Amount to be paid = $3402 Answer
Similar Questions
(1) How much loan did David borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6750 to clear it?
(2) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7990 to clear the loan, then find the time period of the loan.
(3) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $11180 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 7% simple interest.
(5) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(6) Elizabeth had to pay $3967.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(7) Find the amount to be paid if William borrowed a sum of $5500 at 4% simple interest for 7 years.
(8) Find the amount to be paid if Mary borrowed a sum of $5050 at 2% simple interest for 8 years.
(9) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 7% simple interest?
(10) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9472 to clear the loan, then find the time period of the loan.