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 if Barbara borrowed a sum of $3550 at 10% simple interest for 4 years.
(2) What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 8% simple interest?
(3) Find the amount to be paid if Robert borrowed a sum of $5100 at 4% simple interest for 8 years.
(4) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $9600 to clear the loan, then find the time period of the loan.
(5) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10360 to clear the loan, then find the time period of the loan.
(6) How much loan did Jason borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8855 to clear it?
(7) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 9% simple interest for 3 years.
(8) Find the amount to be paid if Joseph borrowed a sum of $5700 at 8% simple interest for 7 years.
(9) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 7% simple interest.
(10) Calculate the amount due if Thomas borrowed a sum of $3800 at 8% simple interest for 4 years.