Question:
What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 5% simple interest?
Correct Answer
$4345
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 5% × 2
= $3950 ×5/100 × 2
= 3950 × 5 × 2/100
= 19750 × 2/100
= 39500/100
= $395
Thus, Simple Interest = $395
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 = $3950 + $395
= $4345
Thus, Amount to be paid = $4345 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 = $3950
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $3950 + ($3950 × 5% × 2)
= $3950 + ($3950 ×5/100 × 2)
= $3950 + (3950 × 5 × 2/100)
= $3950 + (19750 × 2/100)
= $3950 + (39500/100)
= $3950 + $395 = $4345
Thus, Amount (A) to be paid = $4345 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 $3950, the simple interest in 1 year
= 5/100 × 3950
= 5 × 3950/100
= 19750/100 = $197.5
Thus, simple interest for 1 year = $197.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $197.5 × 2 = $395
Thus, Simple Interest (SI) = $395
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $395
= $4345
Thus, Amount to be paid = $4345 Answer
Similar Questions
(1) Find the amount to be paid if Patricia borrowed a sum of $5150 at 4% simple interest for 7 years.
(2) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $10260 to clear the loan, then find the time period of the loan.
(3) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 2% simple interest?
(4) What amount does John have to pay after 6 years if he takes a loan of $3200 at 8% simple interest?
(5) How much loan did Andrew borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7820 to clear it?
(6) If Elizabeth paid $4002 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(7) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 5% simple interest.
(8) If Emily paid $5700 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 3% simple interest?
(10) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 7% simple interest?