Question:
What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 5% simple interest?
Correct Answer
$4235
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 5% × 2
= $3850 ×5/100 × 2
= 3850 × 5 × 2/100
= 19250 × 2/100
= 38500/100
= $385
Thus, Simple Interest = $385
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 = $3850 + $385
= $4235
Thus, Amount to be paid = $4235 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 = $3850
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3850 + ($3850 × 5% × 2)
= $3850 + ($3850 ×5/100 × 2)
= $3850 + (3850 × 5 × 2/100)
= $3850 + (19250 × 2/100)
= $3850 + (38500/100)
= $3850 + $385 = $4235
Thus, Amount (A) to be paid = $4235 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 $3850, the simple interest in 1 year
= 5/100 × 3850
= 5 × 3850/100
= 19250/100 = $192.5
Thus, simple interest for 1 year = $192.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $192.5 × 2 = $385
Thus, Simple Interest (SI) = $385
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $385
= $4235
Thus, Amount to be paid = $4235 Answer
Similar Questions
(1) In how much time a principal of $3100 will amount to $3224 at a simple interest of 2% per annum?
(2) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $9620 to clear the loan, then find the time period of the loan.
(3) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(4) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $10440 to clear the loan, then find the time period of the loan.
(5) Christopher took a loan of $6000 at the rate of 7% simple interest per annum. If he paid an amount of $9780 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if James borrowed a sum of $5000 at 2% simple interest for 7 years.
(7) Calculate the amount due if Susan borrowed a sum of $3650 at 4% simple interest for 4 years.
(8) Find the amount to be paid if Sarah borrowed a sum of $5850 at 2% simple interest for 8 years.
(9) Lisa had to pay $4293 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(10) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 3 years.