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) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $10320 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 5% simple interest.
(3) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(4) Andrew had to pay $5520 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Jennifer had to pay $3542.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.
(7) How much loan did Carol borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8107.5 to clear it?
(8) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(9) Calculate the amount due if James borrowed a sum of $3000 at 3% simple interest for 3 years.
(10) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.