Question:
What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 4% simple interest?
Correct Answer
$4266
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 4% × 2
= $3950 ×4/100 × 2
= 3950 × 4 × 2/100
= 15800 × 2/100
= 31600/100
= $316
Thus, Simple Interest = $316
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 = $3950 + $316
= $4266
Thus, Amount to be paid = $4266 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 = $3950
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 2 years
Thus, Amount (A)
= $3950 + ($3950 × 4% × 2)
= $3950 + ($3950 ×4/100 × 2)
= $3950 + (3950 × 4 × 2/100)
= $3950 + (15800 × 2/100)
= $3950 + (31600/100)
= $3950 + $316 = $4266
Thus, Amount (A) to be paid = $4266 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 $3950, the simple interest in 1 year
= 4/100 × 3950
= 4 × 3950/100
= 15800/100 = $158
Thus, simple interest for 1 year = $158
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $158 × 2 = $316
Thus, Simple Interest (SI) = $316
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $316
= $4266
Thus, Amount to be paid = $4266 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 4% simple interest.
(2) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 7 years.
(3) Elizabeth took a loan of $4900 at the rate of 7% simple interest per annum. If he paid an amount of $7987 to clear the loan, then find the time period of the loan.
(4) Daniel had to pay $4715 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Calculate the amount due if Barbara borrowed a sum of $3550 at 3% simple interest for 3 years.
(6) What amount does John have to pay after 5 years if he takes a loan of $3200 at 5% simple interest?
(7) How much loan did Richard borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6160 to clear it?
(8) Calculate the amount due if Patricia borrowed a sum of $3150 at 9% simple interest for 4 years.
(9) If Richard borrowed $3600 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(10) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 8% simple interest.