Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 5% simple interest for 3 years.
Correct Answer
$4600
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 5% × 3
= $4000 ×5/100 × 3
= 4000 × 5 × 3/100
= 20000 × 3/100
= 60000/100
= $600
Thus, Simple Interest = $600
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 + $600
= $4600
Thus, Amount to be paid = $4600 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) = 5%
And, Time (t) = 3 years
Thus, Amount (A)
= $4000 + ($4000 × 5% × 3)
= $4000 + ($4000 ×5/100 × 3)
= $4000 + (4000 × 5 × 3/100)
= $4000 + (20000 × 3/100)
= $4000 + (60000/100)
= $4000 + $600 = $4600
Thus, Amount (A) to be paid = $4600 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 $4000, the simple interest in 1 year
= 5/100 × 4000
= 5 × 4000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $200 × 3 = $600
Thus, Simple Interest (SI) = $600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $600
= $4600
Thus, Amount to be paid = $4600 Answer
Similar Questions
(1) Matthew took a loan of $6400 at the rate of 7% simple interest per annum. If he paid an amount of $9088 to clear the loan, then find the time period of the loan.
(2) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $8736 to clear the loan, then find the time period of the loan.
(3) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.
(4) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 8% simple interest?
(5) 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.
(6) Sandra took a loan of $6900 at the rate of 6% simple interest per annum. If he paid an amount of $10212 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Patricia borrowed a sum of $3150 at 3% simple interest for 3 years.
(8) Calculate the amount due if Michael borrowed a sum of $3300 at 3% simple interest for 3 years.
(9) Find the amount to be paid if Barbara borrowed a sum of $5550 at 3% simple interest for 7 years.
(10) How much loan did Robert borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5610 to clear it?