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) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6364 to clear the loan, then find the time period of the loan.
(2) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6540 to clear it?
(3) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(4) Nancy had to pay $4399 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(5) In how much time a principal of $3100 will amount to $3720 at a simple interest of 4% per annum?
(6) How much loan did Sharon borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8912.5 to clear it?
(7) Find the amount to be paid if Christopher borrowed a sum of $6000 at 9% simple interest for 8 years.
(8) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6407 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Sarah borrowed a sum of $3850 at 9% simple interest for 3 years.
(10) How much loan did Mary borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6060 to clear it?