Question:
What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 8% simple interest?
Correct Answer
$4292
Solution And Explanation
Solution
Given,
Principal (P) = $3700
Rate of Simple Interest (SI) = 8%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% 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) = $3700 × 8% × 2
= $3700 ×8/100 × 2
= 3700 × 8 × 2/100
= 29600 × 2/100
= 59200/100
= $592
Thus, Simple Interest = $592
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 = $3700 + $592
= $4292
Thus, Amount to be paid = $4292 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 = $3700
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 2 years
Thus, Amount (A)
= $3700 + ($3700 × 8% × 2)
= $3700 + ($3700 ×8/100 × 2)
= $3700 + (3700 × 8 × 2/100)
= $3700 + (29600 × 2/100)
= $3700 + (59200/100)
= $3700 + $592 = $4292
Thus, Amount (A) to be paid = $4292 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $3700, the simple interest in 1 year
= 8/100 × 3700
= 8 × 3700/100
= 29600/100 = $296
Thus, simple interest for 1 year = $296
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $296 × 2 = $592
Thus, Simple Interest (SI) = $592
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $592
= $4292
Thus, Amount to be paid = $4292 Answer
Similar Questions
(1) How much loan did Edward borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8740 to clear it?
(2) Calculate the amount due if James borrowed a sum of $3000 at 9% simple interest for 3 years.
(3) Jennifer had to pay $3737.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(4) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(5) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $7520 to clear the loan, then find the time period of the loan.
(6) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7700 to clear it?
(7) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 6% simple interest?
(8) Paul had to pay $4982 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(9) Calculate the amount due if Jessica borrowed a sum of $3750 at 2% simple interest for 4 years.
(10) What amount does James have to pay after 6 years if he takes a loan of $3000 at 2% simple interest?