Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 2% simple interest for 3 years.
Correct Answer
$4187
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 2% × 3
= $3950 ×2/100 × 3
= 3950 × 2 × 3/100
= 7900 × 3/100
= 23700/100
= $237
Thus, Simple Interest = $237
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 = $3950 + $237
= $4187
Thus, Amount to be paid = $4187 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 = $3950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 3 years
Thus, Amount (A)
= $3950 + ($3950 × 2% × 3)
= $3950 + ($3950 ×2/100 × 3)
= $3950 + (3950 × 2 × 3/100)
= $3950 + (7900 × 3/100)
= $3950 + (23700/100)
= $3950 + $237 = $4187
Thus, Amount (A) to be paid = $4187 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 $3950, the simple interest in 1 year
= 2/100 × 3950
= 2 × 3950/100
= 7900/100 = $79
Thus, simple interest for 1 year = $79
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $79 × 3 = $237
Thus, Simple Interest (SI) = $237
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $237
= $4187
Thus, Amount to be paid = $4187 Answer
Similar Questions
(1) Patricia had to pay $3528 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7040 to clear the loan, then find the time period of the loan.
(3) If Nancy paid $4648 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 7% simple interest?
(5) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $8670 to clear the loan, then find the time period of the loan.
(6) William had to pay $3920 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(7) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 6% simple interest?
(8) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(9) Joseph took a loan of $5400 at the rate of 9% simple interest per annum. If he paid an amount of $10260 to clear the loan, then find the time period of the loan.
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 4% simple interest?