Question:
What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 4% simple interest?
Correct Answer
$4050
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 4% × 2
= $3750 ×4/100 × 2
= 3750 × 4 × 2/100
= 15000 × 2/100
= 30000/100
= $300
Thus, Simple Interest = $300
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 = $3750 + $300
= $4050
Thus, Amount to be paid = $4050 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 = $3750
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 2 years
Thus, Amount (A)
= $3750 + ($3750 × 4% × 2)
= $3750 + ($3750 ×4/100 × 2)
= $3750 + (3750 × 4 × 2/100)
= $3750 + (15000 × 2/100)
= $3750 + (30000/100)
= $3750 + $300 = $4050
Thus, Amount (A) to be paid = $4050 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 $3750, the simple interest in 1 year
= 4/100 × 3750
= 4 × 3750/100
= 15000/100 = $150
Thus, simple interest for 1 year = $150
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $150 × 2 = $300
Thus, Simple Interest (SI) = $300
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $300
= $4050
Thus, Amount to be paid = $4050 Answer
Similar Questions
(1) Susan took a loan of $5300 at the rate of 10% simple interest per annum. If he paid an amount of $9010 to clear the loan, then find the time period of the loan.
(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) James took a loan of $4000 at the rate of 10% simple interest per annum. If he paid an amount of $7600 to clear the loan, then find the time period of the loan.
(4) Kimberly had to pay $5347.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 7% simple interest.
(7) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 7% simple interest?
(8) What amount does James have to pay after 6 years if he takes a loan of $3000 at 3% simple interest?
(9) What amount will be due after 2 years if William borrowed a sum of $3250 at a 10% simple interest?
(10) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 10% simple interest.