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) Nancy took a loan of $6300 at the rate of 8% simple interest per annum. If he paid an amount of $9324 to clear the loan, then find the time period of the loan.
(2) If Richard borrowed $3600 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(3) Find the amount to be paid if Thomas borrowed a sum of $5800 at 2% simple interest for 7 years.
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 6% simple interest for 8 years.
(5) In how much time a principal of $3000 will amount to $3270 at a simple interest of 3% per annum?
(6) What amount does William have to pay after 6 years if he takes a loan of $3500 at 7% simple interest?
(7) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.
(8) How much loan did Edward borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8740 to clear it?
(9) How much loan did Christopher borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6900 to clear it?
(10) Calculate the amount due if William borrowed a sum of $3500 at 6% simple interest for 3 years.