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) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $11520 to clear the loan, then find the time period of the loan.
(2) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8337.5 to clear it?
(3) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 6% simple interest.
(4) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 7% simple interest?
(5) Find the amount to be paid if Michael borrowed a sum of $5300 at 9% simple interest for 7 years.
(6) What amount does William have to pay after 6 years if he takes a loan of $3500 at 7% simple interest?
(7) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(8) Robert had to pay $3565 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(9) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 5% simple interest?
(10) How much loan did Matthew borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7750 to clear it?