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) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.
(2) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7668 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Karen borrowed a sum of $5950 at 3% simple interest for 8 years.
(4) Joseph took a loan of $5400 at the rate of 9% simple interest per annum. If he paid an amount of $9288 to clear the loan, then find the time period of the loan.
(5) Thomas took a loan of $5600 at the rate of 10% simple interest per annum. If he paid an amount of $10640 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Sarah borrowed a sum of $3850 at 10% simple interest for 4 years.
(7) Calculate the amount due if Barbara borrowed a sum of $3550 at 6% simple interest for 4 years.
(8) Find the amount to be paid if Barbara borrowed a sum of $5550 at 9% simple interest for 8 years.
(9) Find the amount to be paid if Thomas borrowed a sum of $5800 at 2% simple interest for 7 years.
(10) Calculate the amount due if Christopher borrowed a sum of $4000 at 10% simple interest for 4 years.