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) How much loan did Jacob borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9600 to clear it?
(2) How much loan did Rebecca borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9180 to clear it?
(3) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $6683 to clear the loan, then find the time period of the loan.
(4) Betty took a loan of $6500 at the rate of 10% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(5) Anthony had to pay $4687 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) Calculate the amount due if Richard borrowed a sum of $3600 at 10% simple interest for 4 years.
(7) Calculate the amount due if Jessica borrowed a sum of $3750 at 3% simple interest for 4 years.
(8) Calculate the amount due if William borrowed a sum of $3500 at 4% simple interest for 3 years.
(9) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $10720 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Mary borrowed a sum of $5050 at 5% simple interest for 7 years.