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) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $10660 to clear the loan, then find the time period of the loan.
(2) Charles took a loan of $5800 at the rate of 8% simple interest per annum. If he paid an amount of $9048 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Thomas borrowed a sum of $3800 at 5% simple interest for 4 years.
(4) How much loan did Donna borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8562.5 to clear it?
(5) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $9280 to clear the loan, then find the time period of the loan.
(6) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9060 to clear it?
(7) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8970 to clear it?
(8) Joseph had to pay $4255 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(9) Christopher took a loan of $6000 at the rate of 7% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(10) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 5% simple interest?