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) How much loan did Sharon borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8525 to clear it?
(2) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 10% simple interest?
(3) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8700 to clear it?
(4) Karen had to pay $4187 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(5) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6540 to clear it?
(6) How much loan did Edward borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9500 to clear it?
(7) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 5% simple interest?
(8) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7252 to clear the loan, then find the time period of the loan.
(9) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $6936 to clear the loan, then find the time period of the loan.
(10) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 6% simple interest?