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) Calculate the amount due if Joseph borrowed a sum of $3700 at 7% simple interest for 3 years.
(2) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $7335 to clear the loan, then find the time period of the loan.
(3) Nancy had to pay $4399 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(4) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $11730 to clear the loan, then find the time period of the loan.
(5) If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(6) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 10% simple interest.
(7) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $10800 to clear the loan, then find the time period of the loan.
(8) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $10664 to clear the loan, then find the time period of the loan.
(9) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 3% simple interest for 3 years.