Question:
Calculate the amount due if David borrowed a sum of $3400 at 2% simple interest for 4 years.
Correct Answer
$3672
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 2%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $3400 × 2% × 4
= $3400 ×2/100 × 4
= 3400 × 2 × 4/100
= 6800 × 4/100
= 27200/100
= $272
Thus, Simple Interest = $272
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 = $3400 + $272
= $3672
Thus, Amount to be paid = $3672 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 = $3400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 4 years
Thus, Amount (A)
= $3400 + ($3400 × 2% × 4)
= $3400 + ($3400 ×2/100 × 4)
= $3400 + (3400 × 2 × 4/100)
= $3400 + (6800 × 4/100)
= $3400 + (27200/100)
= $3400 + $272 = $3672
Thus, Amount (A) to be paid = $3672 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $3400, the simple interest in 1 year
= 2/100 × 3400
= 2 × 3400/100
= 6800/100 = $68
Thus, simple interest for 1 year = $68
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $68 × 4 = $272
Thus, Simple Interest (SI) = $272
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $272
= $3672
Thus, Amount to be paid = $3672 Answer
Similar Questions
(1) Michelle had to pay $5544 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
(3) Find the amount to be paid if Linda borrowed a sum of $5350 at 8% simple interest for 7 years.
(4) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 7% simple interest?
(5) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $7600 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Richard borrowed a sum of $3600 at 6% simple interest for 3 years.
(7) Find the amount to be paid if Thomas borrowed a sum of $5800 at 6% simple interest for 7 years.
(8) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $10496 to clear the loan, then find the time period of the loan.
(9) If Ashley paid $5460 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) What amount does David have to pay after 5 years if he takes a loan of $3400 at 6% simple interest?