Question:
What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 5% simple interest?
Correct Answer
$3795
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 5% × 2
= $3450 ×5/100 × 2
= 3450 × 5 × 2/100
= 17250 × 2/100
= 34500/100
= $345
Thus, Simple Interest = $345
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 = $3450 + $345
= $3795
Thus, Amount to be paid = $3795 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 = $3450
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3450 + ($3450 × 5% × 2)
= $3450 + ($3450 ×5/100 × 2)
= $3450 + (3450 × 5 × 2/100)
= $3450 + (17250 × 2/100)
= $3450 + (34500/100)
= $3450 + $345 = $3795
Thus, Amount (A) to be paid = $3795 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 $3450, the simple interest in 1 year
= 5/100 × 3450
= 5 × 3450/100
= 17250/100 = $172.5
Thus, simple interest for 1 year = $172.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $172.5 × 2 = $345
Thus, Simple Interest (SI) = $345
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $345
= $3795
Thus, Amount to be paid = $3795 Answer
Similar Questions
(1) Find the amount to be paid if Richard borrowed a sum of $5600 at 5% simple interest for 7 years.
(2) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $9310 to clear the loan, then find the time period of the loan.
(3) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8305 to clear it?
(4) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 7% simple interest.
(5) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $8140 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Richard borrowed a sum of $5600 at 4% simple interest for 8 years.
(7) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(8) Kenneth had to pay $5600 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(9) Calculate the amount due if Linda borrowed a sum of $3350 at 10% simple interest for 4 years.
(10) Calculate the amount due if Sarah borrowed a sum of $3850 at 5% simple interest for 4 years.