Question:
Calculate the amount due if William borrowed a sum of $3500 at 7% simple interest for 3 years.
Correct Answer
$4235
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 7%
Time (t) = 3 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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 × 7% × 3
= $3500 ×7/100 × 3
= 3500 × 7 × 3/100
= 24500 × 3/100
= 73500/100
= $735
Thus, Simple Interest = $735
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 + $735
= $4235
Thus, Amount to be paid = $4235 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) = 7%
And, Time (t) = 3 years
Thus, Amount (A)
= $3500 + ($3500 × 7% × 3)
= $3500 + ($3500 ×7/100 × 3)
= $3500 + (3500 × 7 × 3/100)
= $3500 + (24500 × 3/100)
= $3500 + (73500/100)
= $3500 + $735 = $4235
Thus, Amount (A) to be paid = $4235 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $3500, the simple interest in 1 year
= 7/100 × 3500
= 7 × 3500/100
= 24500/100 = $245
Thus, simple interest for 1 year = $245
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $245 × 3 = $735
Thus, Simple Interest (SI) = $735
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $735
= $4235
Thus, Amount to be paid = $4235 Answer
Similar Questions
(1) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 5% simple interest?
(2) How much loan did Patricia borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5922.5 to clear it?
(3) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $7332 to clear the loan, then find the time period of the loan.
(4) What amount does William have to pay after 5 years if he takes a loan of $3500 at 7% simple interest?
(5) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7568 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if John borrowed a sum of $5200 at 2% simple interest for 7 years.
(7) Donna had to pay $5141 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) What amount will be due after 2 years if William borrowed a sum of $3250 at a 8% simple interest?
(9) Calculate the amount due if Robert borrowed a sum of $3100 at 2% simple interest for 4 years.
(10) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 3 years.