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) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 4% simple interest?
(2) Michael took a loan of $4600 at the rate of 8% simple interest per annum. If he paid an amount of $7176 to clear the loan, then find the time period of the loan.
(3) If William paid $3920 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) How much loan did Charles borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7080 to clear it?
(5) How much loan did Kevin borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8875 to clear it?
(6) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 5% simple interest?
(7) What amount does John have to pay after 5 years if he takes a loan of $3200 at 4% simple interest?
(8) In how much time a principal of $3100 will amount to $3472 at a simple interest of 4% per annum?
(9) Find the amount to be paid if Barbara borrowed a sum of $5550 at 4% simple interest for 7 years.
(10) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7599 to clear the loan, then find the time period of the loan.