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) If Michael borrowed $3300 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(2) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $7854 to clear the loan, then find the time period of the loan.
(3) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $8428 to clear the loan, then find the time period of the loan.
(4) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $8344 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Karen borrowed a sum of $5950 at 2% simple interest for 7 years.
(6) Michael took a loan of $4600 at the rate of 8% simple interest per annum. If he paid an amount of $7544 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.
(8) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9916 to clear the loan, then find the time period of the loan.
(9) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 4% simple interest?
(10) Steven had to pay $4876 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.