Question:
Calculate the amount due if David borrowed a sum of $3400 at 2% simple interest for 3 years.
Correct Answer
$3604
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 2%
Time (t) = 3 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $3400 × 2% × 3
= $3400 ×2/100 × 3
= 3400 × 2 × 3/100
= 6800 × 3/100
= 20400/100
= $204
Thus, Simple Interest = $204
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 = $3400 + $204
= $3604
Thus, Amount to be paid = $3604 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 = $3400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 3 years
Thus, Amount (A)
= $3400 + ($3400 × 2% × 3)
= $3400 + ($3400 ×2/100 × 3)
= $3400 + (3400 × 2 × 3/100)
= $3400 + (6800 × 3/100)
= $3400 + (20400/100)
= $3400 + $204 = $3604
Thus, Amount (A) to be paid = $3604 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $3400, the simple interest in 1 year
= 2/100 × 3400
= 2 × 3400/100
= 6800/100 = $68
Thus, simple interest for 1 year = $68
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $68 × 3 = $204
Thus, Simple Interest (SI) = $204
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $204
= $3604
Thus, Amount to be paid = $3604 Answer
Similar Questions
(1) How much loan did Laura borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8635 to clear it?
(2) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 8% simple interest?
(3) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 6% simple interest.
(4) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(5) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 3% simple interest?
(6) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 10% simple interest?
(7) How much loan did Edward borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8360 to clear it?
(8) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Jessica borrowed a sum of $3750 at 7% simple interest for 4 years.
(10) What amount will be due after 2 years if John borrowed a sum of $3100 at a 8% simple interest?