Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 7% simple interest?
Correct Answer
$4560
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 7% × 2
= $4000 ×7/100 × 2
= 4000 × 7 × 2/100
= 28000 × 2/100
= 56000/100
= $560
Thus, Simple Interest = $560
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 = $4000 + $560
= $4560
Thus, Amount to be paid = $4560 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 = $4000
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 7% × 2)
= $4000 + ($4000 ×7/100 × 2)
= $4000 + (4000 × 7 × 2/100)
= $4000 + (28000 × 2/100)
= $4000 + (56000/100)
= $4000 + $560 = $4560
Thus, Amount (A) to be paid = $4560 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 $4000, the simple interest in 1 year
= 7/100 × 4000
= 7 × 4000/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $280 × 2 = $560
Thus, Simple Interest (SI) = $560
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $560
= $4560
Thus, Amount to be paid = $4560 Answer
Similar Questions
(1) Richard had to pay $3816 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) Find the amount to be paid if Thomas borrowed a sum of $5800 at 6% simple interest for 7 years.
(3) Find the amount to be paid if Susan borrowed a sum of $5650 at 7% simple interest for 8 years.
(4) Calculate the amount due if James borrowed a sum of $3000 at 9% simple interest for 3 years.
(5) Calculate the amount due if Christopher borrowed a sum of $4000 at 2% simple interest for 4 years.
(6) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 6% simple interest.
(7) If Sandra paid $4984 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(8) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $10758 to clear the loan, then find the time period of the loan.
(9) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $6854 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 2% simple interest.