Question:
Calculate the amount due if William borrowed a sum of $3500 at 4% simple interest for 3 years.
Correct Answer
$3920
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 4%
Time (t) = 3 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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 × 4% × 3
= $3500 ×4/100 × 3
= 3500 × 4 × 3/100
= 14000 × 3/100
= 42000/100
= $420
Thus, Simple Interest = $420
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 + $420
= $3920
Thus, Amount to be paid = $3920 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) = 4%
And, Time (t) = 3 years
Thus, Amount (A)
= $3500 + ($3500 × 4% × 3)
= $3500 + ($3500 ×4/100 × 3)
= $3500 + (3500 × 4 × 3/100)
= $3500 + (14000 × 3/100)
= $3500 + (42000/100)
= $3500 + $420 = $3920
Thus, Amount (A) to be paid = $3920 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $3500, the simple interest in 1 year
= 4/100 × 3500
= 4 × 3500/100
= 14000/100 = $140
Thus, simple interest for 1 year = $140
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $140 × 3 = $420
Thus, Simple Interest (SI) = $420
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $420
= $3920
Thus, Amount to be paid = $3920 Answer
Similar Questions
(1) What amount does David have to pay after 6 years if he takes a loan of $3400 at 2% simple interest?
(2) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 5% simple interest.
(3) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 9% simple interest?
(4) Elizabeth took a loan of $4900 at the rate of 10% simple interest per annum. If he paid an amount of $8330 to clear the loan, then find the time period of the loan.
(5) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $10980 to clear the loan, then find the time period of the loan.
(6) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 10% simple interest?
(7) If Richard paid $4176 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) Find the amount to be paid if Barbara borrowed a sum of $5550 at 5% simple interest for 7 years.
(9) In how much time a principal of $3200 will amount to $3392 at a simple interest of 2% per annum?
(10) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $12920 to clear the loan, then find the time period of the loan.