Question:
What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 7% simple interest?
Correct Answer
$4503
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 7% × 2
= $3950 ×7/100 × 2
= 3950 × 7 × 2/100
= 27650 × 2/100
= 55300/100
= $553
Thus, Simple Interest = $553
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 = $3950 + $553
= $4503
Thus, Amount to be paid = $4503 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 = $3950
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 2 years
Thus, Amount (A)
= $3950 + ($3950 × 7% × 2)
= $3950 + ($3950 ×7/100 × 2)
= $3950 + (3950 × 7 × 2/100)
= $3950 + (27650 × 2/100)
= $3950 + (55300/100)
= $3950 + $553 = $4503
Thus, Amount (A) to be paid = $4503 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 $3950, the simple interest in 1 year
= 7/100 × 3950
= 7 × 3950/100
= 27650/100 = $276.5
Thus, simple interest for 1 year = $276.5
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $276.5 × 2 = $553
Thus, Simple Interest (SI) = $553
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $553
= $4503
Thus, Amount to be paid = $4503 Answer
Similar Questions
(1) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $9620 to clear the loan, then find the time period of the loan.
(2) If Christopher borrowed $4000 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) How much loan did Jessica borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7187.5 to clear it?
(4) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $9116 to clear the loan, then find the time period of the loan.
(5) How much loan did David borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6750 to clear it?
(6) If Charles borrowed $3900 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(7) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 3% simple interest.
(8) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.
(9) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $10921 to clear the loan, then find the time period of the loan.
(10) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $11020 to clear the loan, then find the time period of the loan.