Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 5% simple interest?
Correct Answer
$4400
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 5% × 2
= $4000 ×5/100 × 2
= 4000 × 5 × 2/100
= 20000 × 2/100
= 40000/100
= $400
Thus, Simple Interest = $400
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 = $4000 + $400
= $4400
Thus, Amount to be paid = $4400 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 = $4000
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 5% × 2)
= $4000 + ($4000 ×5/100 × 2)
= $4000 + (4000 × 5 × 2/100)
= $4000 + (20000 × 2/100)
= $4000 + (40000/100)
= $4000 + $400 = $4400
Thus, Amount (A) to be paid = $4400 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 $4000, the simple interest in 1 year
= 5/100 × 4000
= 5 × 4000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $200 × 2 = $400
Thus, Simple Interest (SI) = $400
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $400
= $4400
Thus, Amount to be paid = $4400 Answer
Similar Questions
(1) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8050 to clear it?
(2) In how much time a principal of $3200 will amount to $3712 at a simple interest of 4% per annum?
(3) If Charles borrowed $3900 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) How much loan did Melissa borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8452.5 to clear it?
(5) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 9% simple interest.
(6) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if David borrowed a sum of $3400 at 6% simple interest for 3 years.
(8) Calculate the amount due if Patricia borrowed a sum of $3150 at 5% simple interest for 4 years.
(9) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 7% simple interest?
(10) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 10% simple interest?