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) If Michelle paid $5940 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $8732 to clear the loan, then find the time period of the loan.
(3) Charles took a loan of $5800 at the rate of 9% simple interest per annum. If he paid an amount of $8932 to clear the loan, then find the time period of the loan.
(4) Lisa took a loan of $6100 at the rate of 9% simple interest per annum. If he paid an amount of $9943 to clear the loan, then find the time period of the loan.
(5) If Elizabeth borrowed $3450 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(6) Mark took a loan of $6800 at the rate of 6% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(7) How much loan did Richard borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7000 to clear it?
(8) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9088 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 3 years.
(10) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8337.5 to clear it?