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) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 3% simple interest.
(2) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6120 to clear the loan, then find the time period of the loan.
(3) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $8930 to clear the loan, then find the time period of the loan.
(4) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(5) Susan took a loan of $5300 at the rate of 6% simple interest per annum. If he paid an amount of $8162 to clear the loan, then find the time period of the loan.
(6) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(7) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 10% simple interest?
(8) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(9) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 10% simple interest?
(10) Calculate the amount due if Karen borrowed a sum of $3950 at 2% simple interest for 3 years.