Question:
What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 10% simple interest?
Correct Answer
$4500
Solution And Explanation
Solution
Given,
Principal (P) = $3750
Rate of Simple Interest (SI) = 10%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 10% simple interest means, Rate of Simple Interest (SI) is 10% 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) = $3750 × 10% × 2
= $3750 ×10/100 × 2
= 3750 × 10 × 2/100
= 37500 × 2/100
= 75000/100
= $750
Thus, Simple Interest = $750
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 = $3750 + $750
= $4500
Thus, Amount to be paid = $4500 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 = $3750
Rate of Simple Interest (SI) or (R) = 10%
And, Time (t) = 2 years
Thus, Amount (A)
= $3750 + ($3750 × 10% × 2)
= $3750 + ($3750 ×10/100 × 2)
= $3750 + (3750 × 10 × 2/100)
= $3750 + (37500 × 2/100)
= $3750 + (75000/100)
= $3750 + $750 = $4500
Thus, Amount (A) to be paid = $4500 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 10%
This, means, $10 per $100 per year
∵ For $100, the simple interest for 1 year = $10
∴ For $1, the simple interest for 1 year = 10/100
∴ For $3750, the simple interest in 1 year
= 10/100 × 3750
= 10 × 3750/100
= 37500/100 = $375
Thus, simple interest for 1 year = $375
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $375 × 2 = $750
Thus, Simple Interest (SI) = $750
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $750
= $4500
Thus, Amount to be paid = $4500 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 8% simple interest?
(2) Michael took a loan of $4600 at the rate of 9% simple interest per annum. If he paid an amount of $7912 to clear the loan, then find the time period of the loan.
(3) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 5% simple interest?
(4) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 9% simple interest.
(5) Patricia took a loan of $4300 at the rate of 10% simple interest per annum. If he paid an amount of $8170 to clear the loan, then find the time period of the loan.
(6) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 7% simple interest?
(7) Find the amount to be paid if Michael borrowed a sum of $5300 at 5% simple interest for 7 years.
(8) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 10% simple interest.
(9) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8094 to clear the loan, then find the time period of the loan.
(10) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7315 to clear it?