Question:
What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 5% simple interest?
Correct Answer
$3850
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 5% × 2
= $3500 ×5/100 × 2
= 3500 × 5 × 2/100
= 17500 × 2/100
= 35000/100
= $350
Thus, Simple Interest = $350
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 = $3500 + $350
= $3850
Thus, Amount to be paid = $3850 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 = $3500
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3500 + ($3500 × 5% × 2)
= $3500 + ($3500 ×5/100 × 2)
= $3500 + (3500 × 5 × 2/100)
= $3500 + (17500 × 2/100)
= $3500 + (35000/100)
= $3500 + $350 = $3850
Thus, Amount (A) to be paid = $3850 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 $3500, the simple interest in 1 year
= 5/100 × 3500
= 5 × 3500/100
= 17500/100 = $175
Thus, simple interest for 1 year = $175
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $175 × 2 = $350
Thus, Simple Interest (SI) = $350
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $350
= $3850
Thus, Amount to be paid = $3850 Answer
Similar Questions
(1) Thomas had to pay $4370 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(2) Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $10780 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 10% simple interest for 8 years.
(4) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $6674 to clear the loan, then find the time period of the loan.
(5) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if William borrowed a sum of $5500 at 2% simple interest for 8 years.
(7) Calculate the amount due if Richard borrowed a sum of $3600 at 7% simple interest for 4 years.
(8) If Karen paid $4266 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(10) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $9000 to clear the loan, then find the time period of the loan.