Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 9% simple interest?
Correct Answer
$4720
Solution And Explanation
Solution
Given,
Principal (P) = $4000
Rate of Simple Interest (SI) = 9%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 9% simple interest means, Rate of Simple Interest (SI) is 9% 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 × 9% × 2
= $4000 ×9/100 × 2
= 4000 × 9 × 2/100
= 36000 × 2/100
= 72000/100
= $720
Thus, Simple Interest = $720
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 + $720
= $4720
Thus, Amount to be paid = $4720 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) = 9%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 9% × 2)
= $4000 + ($4000 ×9/100 × 2)
= $4000 + (4000 × 9 × 2/100)
= $4000 + (36000 × 2/100)
= $4000 + (72000/100)
= $4000 + $720 = $4720
Thus, Amount (A) to be paid = $4720 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 9%
This, means, $9 per $100 per year
∵ For $100, the simple interest for 1 year = $9
∴ For $1, the simple interest for 1 year = 9/100
∴ For $4000, the simple interest in 1 year
= 9/100 × 4000
= 9 × 4000/100
= 36000/100 = $360
Thus, simple interest for 1 year = $360
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $360 × 2 = $720
Thus, Simple Interest (SI) = $720
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $720
= $4720
Thus, Amount to be paid = $4720 Answer
Similar Questions
(1) Calculate the amount due if Michael borrowed a sum of $3300 at 2% simple interest for 4 years.
(2) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $8256 to clear the loan, then find the time period of the loan.
(3) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $6520 to clear the loan, then find the time period of the loan.
(4) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 3% simple interest?
(5) Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 3 years.
(6) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 4% simple interest?
(7) If Jennifer paid $3900 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) Sarah had to pay $4196.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Joseph borrowed a sum of $5700 at 4% simple interest for 8 years.