Question:
What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 5% simple interest?
Correct Answer
$4290
Solution And Explanation
Solution
Given,
Principal (P) = $3900
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) = $3900 × 5% × 2
= $3900 ×5/100 × 2
= 3900 × 5 × 2/100
= 19500 × 2/100
= 39000/100
= $390
Thus, Simple Interest = $390
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 = $3900 + $390
= $4290
Thus, Amount to be paid = $4290 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 = $3900
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3900 + ($3900 × 5% × 2)
= $3900 + ($3900 ×5/100 × 2)
= $3900 + (3900 × 5 × 2/100)
= $3900 + (19500 × 2/100)
= $3900 + (39000/100)
= $3900 + $390 = $4290
Thus, Amount (A) to be paid = $4290 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 $3900, the simple interest in 1 year
= 5/100 × 3900
= 5 × 3900/100
= 19500/100 = $195
Thus, simple interest for 1 year = $195
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $195 × 2 = $390
Thus, Simple Interest (SI) = $390
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3900 + $390
= $4290
Thus, Amount to be paid = $4290 Answer
Similar Questions
(1) Calculate the amount due if Sarah borrowed a sum of $3850 at 2% simple interest for 4 years.
(2) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 4 years.
(3) How much loan did Jennifer borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6562.5 to clear it?
(4) If Sandra paid $4806 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(5) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
(6) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Mary borrowed a sum of $3050 at 6% simple interest for 3 years.
(8) Calculate the amount due if William borrowed a sum of $3500 at 3% simple interest for 4 years.
(9) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $10269 to clear the loan, then find the time period of the loan.
(10) How much loan did Sandra borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7095 to clear it?