Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 4% simple interest for 3 years.
Correct Answer
$4480
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 4% × 3
= $4000 ×4/100 × 3
= 4000 × 4 × 3/100
= 16000 × 3/100
= 48000/100
= $480
Thus, Simple Interest = $480
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 + $480
= $4480
Thus, Amount to be paid = $4480 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) = 4%
And, Time (t) = 3 years
Thus, Amount (A)
= $4000 + ($4000 × 4% × 3)
= $4000 + ($4000 ×4/100 × 3)
= $4000 + (4000 × 4 × 3/100)
= $4000 + (16000 × 3/100)
= $4000 + (48000/100)
= $4000 + $480 = $4480
Thus, Amount (A) to be paid = $4480 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 $4000, the simple interest in 1 year
= 4/100 × 4000
= 4 × 4000/100
= 16000/100 = $160
Thus, simple interest for 1 year = $160
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $160 × 3 = $480
Thus, Simple Interest (SI) = $480
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $480
= $4480
Thus, Amount to be paid = $4480 Answer
Similar Questions
(1) If Sandra paid $5340 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Calculate the amount due if Barbara borrowed a sum of $3550 at 7% simple interest for 3 years.
(3) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 10% simple interest for 7 years.
(4) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 10% simple interest.
(5) Find the amount to be paid if Richard borrowed a sum of $5600 at 4% simple interest for 8 years.
(6) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 3% simple interest.
(8) If Charles borrowed $3900 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(9) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $7380 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Charles borrowed a sum of $3900 at 4% simple interest for 3 years.