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) Find the amount to be paid if Robert borrowed a sum of $5100 at 4% simple interest for 7 years.
(2) Find the amount to be paid if John borrowed a sum of $5200 at 6% simple interest for 8 years.
(3) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.
(4) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7599 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Richard borrowed a sum of $5600 at 6% simple interest for 7 years.
(6) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 5% simple interest.
(7) Calculate the amount due if Christopher borrowed a sum of $4000 at 9% simple interest for 3 years.
(8) How much loan did Matthew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6820 to clear it?
(9) In how much time a principal of $3100 will amount to $3410 at a simple interest of 2% per annum?
(10) How much loan did Jason borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9240 to clear it?