Question:
What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 7% simple interest?
Correct Answer
$4275
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 7% × 2
= $3750 ×7/100 × 2
= 3750 × 7 × 2/100
= 26250 × 2/100
= 52500/100
= $525
Thus, Simple Interest = $525
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 = $3750 + $525
= $4275
Thus, Amount to be paid = $4275 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 = $3750
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 2 years
Thus, Amount (A)
= $3750 + ($3750 × 7% × 2)
= $3750 + ($3750 ×7/100 × 2)
= $3750 + (3750 × 7 × 2/100)
= $3750 + (26250 × 2/100)
= $3750 + (52500/100)
= $3750 + $525 = $4275
Thus, Amount (A) to be paid = $4275 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 $3750, the simple interest in 1 year
= 7/100 × 3750
= 7 × 3750/100
= 26250/100 = $262.5
Thus, simple interest for 1 year = $262.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $262.5 × 2 = $525
Thus, Simple Interest (SI) = $525
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $525
= $4275
Thus, Amount to be paid = $4275 Answer
Similar Questions
(1) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 8% simple interest?
(2) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $11400 to clear the loan, then find the time period of the loan.
(3) What amount does James have to pay after 6 years if he takes a loan of $3000 at 3% simple interest?
(4) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8507 to clear the loan, then find the time period of the loan.
(5) How much loan did Sarah borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6727.5 to clear it?
(6) If Nancy paid $4980 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 8% simple interest.
(8) How much loan did Carol borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8812.5 to clear it?
(9) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 3% simple interest.
(10) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9048 to clear the loan, then find the time period of the loan.