Question:
Calculate the amount due if Joseph borrowed a sum of $3700 at 2% simple interest for 4 years.
Correct Answer
$3996
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 2% × 4
= $3700 ×2/100 × 4
= 3700 × 2 × 4/100
= 7400 × 4/100
= 29600/100
= $296
Thus, Simple Interest = $296
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 = $3700 + $296
= $3996
Thus, Amount to be paid = $3996 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 = $3700
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 4 years
Thus, Amount (A)
= $3700 + ($3700 × 2% × 4)
= $3700 + ($3700 ×2/100 × 4)
= $3700 + (3700 × 2 × 4/100)
= $3700 + (7400 × 4/100)
= $3700 + (29600/100)
= $3700 + $296 = $3996
Thus, Amount (A) to be paid = $3996 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 $3700, the simple interest in 1 year
= 2/100 × 3700
= 2 × 3700/100
= 7400/100 = $74
Thus, simple interest for 1 year = $74
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $74 × 4 = $296
Thus, Simple Interest (SI) = $296
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $296
= $3996
Thus, Amount to be paid = $3996 Answer
Similar Questions
(1) Andrew had to pay $5232 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) Find the amount to be paid if Michael borrowed a sum of $5300 at 10% simple interest for 8 years.
(3) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if John borrowed a sum of $3200 at 4% simple interest for 4 years.
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 8% simple interest for 4 years.
(6) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $9176 to clear the loan, then find the time period of the loan.
(7) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 8% simple interest?
(8) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 9% simple interest.
(9) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $10140 to clear the loan, then find the time period of the loan.
(10) If Patricia borrowed $3150 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.