Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 3 years.
Correct Answer
$4542.5
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 5% × 3
= $3950 ×5/100 × 3
= 3950 × 5 × 3/100
= 19750 × 3/100
= 59250/100
= $592.5
Thus, Simple Interest = $592.5
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 = $3950 + $592.5
= $4542.5
Thus, Amount to be paid = $4542.5 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 = $3950
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 3 years
Thus, Amount (A)
= $3950 + ($3950 × 5% × 3)
= $3950 + ($3950 ×5/100 × 3)
= $3950 + (3950 × 5 × 3/100)
= $3950 + (19750 × 3/100)
= $3950 + (59250/100)
= $3950 + $592.5 = $4542.5
Thus, Amount (A) to be paid = $4542.5 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 $3950, the simple interest in 1 year
= 5/100 × 3950
= 5 × 3950/100
= 19750/100 = $197.5
Thus, simple interest for 1 year = $197.5
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $197.5 × 3 = $592.5
Thus, Simple Interest (SI) = $592.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $592.5
= $4542.5
Thus, Amount to be paid = $4542.5 Answer
Similar Questions
(1) Susan took a loan of $5300 at the rate of 7% simple interest per annum. If he paid an amount of $9010 to clear the loan, then find the time period of the loan.
(2) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 5% simple interest?
(3) If Joseph borrowed $3700 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) If Kenneth paid $6000 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) Calculate the amount due if David borrowed a sum of $3400 at 3% simple interest for 4 years.
(6) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 4 years.
(7) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $13300 to clear the loan, then find the time period of the loan.
(8) How much loan did Sandra borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7095 to clear it?
(9) Calculate the amount due if Linda borrowed a sum of $3350 at 3% simple interest for 4 years.
(10) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 3 years.