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) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $8470 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 7 years.
(3) If Michelle paid $5742 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(4) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 7% simple interest?
(5) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 5% simple interest?
(6) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 4% simple interest?
(7) Joseph took a loan of $5400 at the rate of 9% simple interest per annum. If he paid an amount of $8802 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Charles borrowed a sum of $5900 at 4% simple interest for 8 years.
(9) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 2% simple interest for 3 years.
(10) In how much time a principal of $3100 will amount to $3720 at a simple interest of 5% per annum?