Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 10% simple interest?
Correct Answer
$4800
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 10% × 2
= $4000 ×10/100 × 2
= 4000 × 10 × 2/100
= 40000 × 2/100
= 80000/100
= $800
Thus, Simple Interest = $800
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 + $800
= $4800
Thus, Amount to be paid = $4800 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) = 10%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 10% × 2)
= $4000 + ($4000 ×10/100 × 2)
= $4000 + (4000 × 10 × 2/100)
= $4000 + (40000 × 2/100)
= $4000 + (80000/100)
= $4000 + $800 = $4800
Thus, Amount (A) to be paid = $4800 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 $4000, the simple interest in 1 year
= 10/100 × 4000
= 10 × 4000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $400 × 2 = $800
Thus, Simple Interest (SI) = $800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $800
= $4800
Thus, Amount to be paid = $4800 Answer
Similar Questions
(1) Mark took a loan of $6800 at the rate of 7% simple interest per annum. If he paid an amount of $11560 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if William borrowed a sum of $5500 at 10% simple interest for 7 years.
(3) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $10452 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Thomas borrowed a sum of $5800 at 4% simple interest for 7 years.
(5) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 2% simple interest.
(6) How much loan did Donna borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8562.5 to clear it?
(7) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 5% simple interest.
(8) John took a loan of $4400 at the rate of 9% simple interest per annum. If he paid an amount of $8360 to clear the loan, then find the time period of the loan.
(9) In how much time a principal of $3000 will amount to $3270 at a simple interest of 3% per annum?
(10) Calculate the amount due if Robert borrowed a sum of $3100 at 5% simple interest for 4 years.