Question:
What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 4% simple interest?
Correct Answer
$4158
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 4% × 2
= $3850 ×4/100 × 2
= 3850 × 4 × 2/100
= 15400 × 2/100
= 30800/100
= $308
Thus, Simple Interest = $308
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 = $3850 + $308
= $4158
Thus, Amount to be paid = $4158 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 = $3850
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 2 years
Thus, Amount (A)
= $3850 + ($3850 × 4% × 2)
= $3850 + ($3850 ×4/100 × 2)
= $3850 + (3850 × 4 × 2/100)
= $3850 + (15400 × 2/100)
= $3850 + (30800/100)
= $3850 + $308 = $4158
Thus, Amount (A) to be paid = $4158 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 $3850, the simple interest in 1 year
= 4/100 × 3850
= 4 × 3850/100
= 15400/100 = $154
Thus, simple interest for 1 year = $154
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $154 × 2 = $308
Thus, Simple Interest (SI) = $308
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $308
= $4158
Thus, Amount to be paid = $4158 Answer
Similar Questions
(1) If Michael paid $3828 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(2) Find the amount to be paid if Richard borrowed a sum of $5600 at 8% simple interest for 7 years.
(3) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $5984 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if David borrowed a sum of $5400 at 3% simple interest for 8 years.
(5) Calculate the amount due if Patricia borrowed a sum of $3150 at 6% simple interest for 3 years.
(6) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $11524 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 2% simple interest for 4 years.
(8) What amount does William have to pay after 6 years if he takes a loan of $3500 at 7% simple interest?
(9) If Susan borrowed $3650 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(10) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 5% simple interest.