Question:
What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 7% simple interest?
Correct Answer
$4389
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 7% × 2
= $3850 ×7/100 × 2
= 3850 × 7 × 2/100
= 26950 × 2/100
= 53900/100
= $539
Thus, Simple Interest = $539
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 = $3850 + $539
= $4389
Thus, Amount to be paid = $4389 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 = $3850
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 2 years
Thus, Amount (A)
= $3850 + ($3850 × 7% × 2)
= $3850 + ($3850 ×7/100 × 2)
= $3850 + (3850 × 7 × 2/100)
= $3850 + (26950 × 2/100)
= $3850 + (53900/100)
= $3850 + $539 = $4389
Thus, Amount (A) to be paid = $4389 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 $3850, the simple interest in 1 year
= 7/100 × 3850
= 7 × 3850/100
= 26950/100 = $269.5
Thus, simple interest for 1 year = $269.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $269.5 × 2 = $539
Thus, Simple Interest (SI) = $539
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $539
= $4389
Thus, Amount to be paid = $4389 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 8% simple interest.
(2) How much loan did Charles borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6490 to clear it?
(3) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $10296 to clear the loan, then find the time period of the loan.
(4) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $8642 to clear the loan, then find the time period of the loan.
(5) What amount does James have to pay after 5 years if he takes a loan of $3000 at 6% simple interest?
(6) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 7% simple interest?
(7) How much loan did Ashley borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7205 to clear it?
(8) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 7% simple interest.
(9) Calculate the amount due if Sarah borrowed a sum of $3850 at 9% simple interest for 4 years.
(10) Mark had to pay $4796 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.