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) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $10440 to clear the loan, then find the time period of the loan.
(2) What amount does David have to pay after 6 years if he takes a loan of $3400 at 7% simple interest?
(3) James had to pay $3180 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 7% simple interest for 7 years.
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 3% simple interest for 4 years.
(6) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 2% simple interest?
(7) If Linda borrowed $3350 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(8) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 4% simple interest?
(9) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 3% simple interest?
(10) How much loan did Karen borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7437.5 to clear it?