Question:
Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 3 years.
Correct Answer
$4025
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 5%
Time (t) = 3 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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 × 5% × 3
= $3500 ×5/100 × 3
= 3500 × 5 × 3/100
= 17500 × 3/100
= 52500/100
= $525
Thus, Simple Interest = $525
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 + $525
= $4025
Thus, Amount to be paid = $4025 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) = 5%
And, Time (t) = 3 years
Thus, Amount (A)
= $3500 + ($3500 × 5% × 3)
= $3500 + ($3500 ×5/100 × 3)
= $3500 + (3500 × 5 × 3/100)
= $3500 + (17500 × 3/100)
= $3500 + (52500/100)
= $3500 + $525 = $4025
Thus, Amount (A) to be paid = $4025 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $3500, the simple interest in 1 year
= 5/100 × 3500
= 5 × 3500/100
= 17500/100 = $175
Thus, simple interest for 1 year = $175
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $175 × 3 = $525
Thus, Simple Interest (SI) = $525
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $525
= $4025
Thus, Amount to be paid = $4025 Answer
Similar Questions
(1) What amount does John have to pay after 5 years if he takes a loan of $3200 at 9% simple interest?
(2) What amount does David have to pay after 6 years if he takes a loan of $3400 at 4% simple interest?
(3) James had to pay $3360 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $9760 to clear the loan, then find the time period of the loan.
(5) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9028 to clear the loan, then find the time period of the loan.
(6) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 5% simple interest?
(7) Margaret had to pay $4741.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(8) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 9% simple interest?
(9) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $10164 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Mary borrowed a sum of $3050 at 5% simple interest for 3 years.