Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 2% simple interest for 3 years.
Correct Answer
$4240
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 2% × 3
= $4000 ×2/100 × 3
= 4000 × 2 × 3/100
= 8000 × 3/100
= 24000/100
= $240
Thus, Simple Interest = $240
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 + $240
= $4240
Thus, Amount to be paid = $4240 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) = 2%
And, Time (t) = 3 years
Thus, Amount (A)
= $4000 + ($4000 × 2% × 3)
= $4000 + ($4000 ×2/100 × 3)
= $4000 + (4000 × 2 × 3/100)
= $4000 + (8000 × 3/100)
= $4000 + (24000/100)
= $4000 + $240 = $4240
Thus, Amount (A) to be paid = $4240 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 $4000, the simple interest in 1 year
= 2/100 × 4000
= 2 × 4000/100
= 8000/100 = $80
Thus, simple interest for 1 year = $80
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $80 × 3 = $240
Thus, Simple Interest (SI) = $240
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $240
= $4240
Thus, Amount to be paid = $4240 Answer
Similar Questions
(1) What amount does James have to pay after 5 years if he takes a loan of $3000 at 2% simple interest?
(2) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(3) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 3% simple interest?
(4) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $13400 to clear the loan, then find the time period of the loan.
(5) If James paid $3480 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $9702 to clear the loan, then find the time period of the loan.
(7) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 3% simple interest?
(8) Find the amount to be paid if Charles borrowed a sum of $5900 at 10% simple interest for 7 years.
(9) Calculate the amount due if Patricia borrowed a sum of $3150 at 6% simple interest for 3 years.
(10) Elizabeth had to pay $3967.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.