Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 4% simple interest?
Correct Answer
$4320
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 4% × 2
= $4000 ×4/100 × 2
= 4000 × 4 × 2/100
= 16000 × 2/100
= 32000/100
= $320
Thus, Simple Interest = $320
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 = $4000 + $320
= $4320
Thus, Amount to be paid = $4320 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 = $4000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 4% × 2)
= $4000 + ($4000 ×4/100 × 2)
= $4000 + (4000 × 4 × 2/100)
= $4000 + (16000 × 2/100)
= $4000 + (32000/100)
= $4000 + $320 = $4320
Thus, Amount (A) to be paid = $4320 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 $4000, the simple interest in 1 year
= 4/100 × 4000
= 4 × 4000/100
= 16000/100 = $160
Thus, simple interest for 1 year = $160
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $160 × 2 = $320
Thus, Simple Interest (SI) = $320
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $320
= $4320
Thus, Amount to be paid = $4320 Answer
Similar Questions
(1) Find the amount to be paid if William borrowed a sum of $5500 at 6% simple interest for 7 years.
(2) In how much time a principal of $3200 will amount to $4000 at a simple interest of 5% per annum?
(3) Calculate the amount due if Michael borrowed a sum of $3300 at 10% simple interest for 4 years.
(4) Calculate the amount due if Sarah borrowed a sum of $3850 at 4% simple interest for 4 years.
(5) William had to pay $3710 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(6) What amount does David have to pay after 6 years if he takes a loan of $3400 at 3% simple interest?
(7) If Joseph borrowed $3700 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(8) Calculate the amount due if Joseph borrowed a sum of $3700 at 9% simple interest for 3 years.
(9) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 9% simple interest.
(10) Calculate the amount due if Richard borrowed a sum of $3600 at 2% simple interest for 3 years.