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 does Jessica have to pay after 6 years if he takes a loan of $3750 at 3% simple interest?
(2) Thomas took a loan of $5600 at the rate of 6% simple interest per annum. If he paid an amount of $7952 to clear the loan, then find the time period of the loan.
(3) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 3% simple interest?
(4) If Richard paid $3888 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(5) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $9676 to clear the loan, then find the time period of the loan.
(6) Lisa took a loan of $6100 at the rate of 9% simple interest per annum. If he paid an amount of $11041 to clear the loan, then find the time period of the loan.
(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 8% simple interest?
(8) What amount does James have to pay after 5 years if he takes a loan of $3000 at 5% simple interest?
(9) Find the amount to be paid if John borrowed a sum of $5200 at 2% simple interest for 8 years.
(10) If Richard borrowed $3600 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.