Question:
What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 5% simple interest?
Correct Answer
$3465
Solution And Explanation
Solution
Given,
Principal (P) = $3150
Rate of Simple Interest (SI) = 5%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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) = $3150 × 5% × 2
= $3150 ×5/100 × 2
= 3150 × 5 × 2/100
= 15750 × 2/100
= 31500/100
= $315
Thus, Simple Interest = $315
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 = $3150 + $315
= $3465
Thus, Amount to be paid = $3465 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 = $3150
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3150 + ($3150 × 5% × 2)
= $3150 + ($3150 ×5/100 × 2)
= $3150 + (3150 × 5 × 2/100)
= $3150 + (15750 × 2/100)
= $3150 + (31500/100)
= $3150 + $315 = $3465
Thus, Amount (A) to be paid = $3465 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $3150, the simple interest in 1 year
= 5/100 × 3150
= 5 × 3150/100
= 15750/100 = $157.5
Thus, simple interest for 1 year = $157.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $157.5 × 2 = $315
Thus, Simple Interest (SI) = $315
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3150 + $315
= $3465
Thus, Amount to be paid = $3465 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 7% simple interest.
(2) How much loan did Donald borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7475 to clear it?
(3) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 10% simple interest?
(4) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 8% simple interest?
(5) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 9% simple interest?
(6) Calculate the amount due if Michael borrowed a sum of $3300 at 4% simple interest for 3 years.
(7) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 10% simple interest.
(8) Robert had to pay $3472 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(9) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 7 years.
(10) Robert took a loan of $4200 at the rate of 6% simple interest per annum. If he paid an amount of $6468 to clear the loan, then find the time period of the loan.