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) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 9% simple interest?
(2) If Charles paid $4524 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(3) Michael had to pay $3498 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(4) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $8736 to clear the loan, then find the time period of the loan.
(5) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $11560 to clear the loan, then find the time period of the loan.
(6) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $10450 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Christopher borrowed a sum of $4000 at 7% simple interest for 3 years.
(8) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 2% simple interest.
(9) What amount does John have to pay after 6 years if he takes a loan of $3200 at 9% simple interest?
(10) Find the amount to be paid if Thomas borrowed a sum of $5800 at 8% simple interest for 7 years.