Question:
Calculate the amount due if William borrowed a sum of $3500 at 2% simple interest for 3 years.
Correct Answer
$3710
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 2% × 3
= $3500 ×2/100 × 3
= 3500 × 2 × 3/100
= 7000 × 3/100
= 21000/100
= $210
Thus, Simple Interest = $210
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 = $3500 + $210
= $3710
Thus, Amount to be paid = $3710 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 = $3500
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 3 years
Thus, Amount (A)
= $3500 + ($3500 × 2% × 3)
= $3500 + ($3500 ×2/100 × 3)
= $3500 + (3500 × 2 × 3/100)
= $3500 + (7000 × 3/100)
= $3500 + (21000/100)
= $3500 + $210 = $3710
Thus, Amount (A) to be paid = $3710 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 $3500, the simple interest in 1 year
= 2/100 × 3500
= 2 × 3500/100
= 7000/100 = $70
Thus, simple interest for 1 year = $70
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $70 × 3 = $210
Thus, Simple Interest (SI) = $210
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $210
= $3710
Thus, Amount to be paid = $3710 Answer
Similar Questions
(1) If Ashley paid $5278 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(2) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(3) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7332 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Richard borrowed a sum of $5600 at 10% simple interest for 8 years.
(5) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $10140 to clear the loan, then find the time period of the loan.
(6) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 8% simple interest?
(7) Calculate the amount due if John borrowed a sum of $3200 at 10% simple interest for 4 years.
(8) If Steven paid $5520 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) What amount does David have to pay after 5 years if he takes a loan of $3400 at 2% simple interest?
(10) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 4 years.