Question:
What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 7% simple interest?
Correct Answer
$3591
Solution And Explanation
Solution
Given,
Principal (P) = $3150
Rate of Simple Interest (SI) = 7%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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) = $3150 × 7% × 2
= $3150 ×7/100 × 2
= 3150 × 7 × 2/100
= 22050 × 2/100
= 44100/100
= $441
Thus, Simple Interest = $441
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 = $3150 + $441
= $3591
Thus, Amount to be paid = $3591 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 = $3150
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 2 years
Thus, Amount (A)
= $3150 + ($3150 × 7% × 2)
= $3150 + ($3150 ×7/100 × 2)
= $3150 + (3150 × 7 × 2/100)
= $3150 + (22050 × 2/100)
= $3150 + (44100/100)
= $3150 + $441 = $3591
Thus, Amount (A) to be paid = $3591 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $3150, the simple interest in 1 year
= 7/100 × 3150
= 7 × 3150/100
= 22050/100 = $220.5
Thus, simple interest for 1 year = $220.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $220.5 × 2 = $441
Thus, Simple Interest (SI) = $441
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3150 + $441
= $3591
Thus, Amount to be paid = $3591 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(2) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(3) Sandra had to pay $4984 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) 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.
(5) If Betty paid $4590 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $8145 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if David borrowed a sum of $5400 at 3% simple interest for 7 years.
(8) Robert had to pay $3379 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) Calculate the amount due if Christopher borrowed a sum of $4000 at 10% simple interest for 3 years.
(10) If Elizabeth paid $3726 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.