Question:
Calculate the amount due if Sarah borrowed a sum of $3850 at 2% simple interest for 4 years.
Correct Answer
$4158
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 2% × 4
= $3850 ×2/100 × 4
= 3850 × 2 × 4/100
= 7700 × 4/100
= 30800/100
= $308
Thus, Simple Interest = $308
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 = $3850 + $308
= $4158
Thus, Amount to be paid = $4158 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 = $3850
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 4 years
Thus, Amount (A)
= $3850 + ($3850 × 2% × 4)
= $3850 + ($3850 ×2/100 × 4)
= $3850 + (3850 × 2 × 4/100)
= $3850 + (7700 × 4/100)
= $3850 + (30800/100)
= $3850 + $308 = $4158
Thus, Amount (A) to be paid = $4158 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 $3850, the simple interest in 1 year
= 2/100 × 3850
= 2 × 3850/100
= 7700/100 = $77
Thus, simple interest for 1 year = $77
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $77 × 4 = $308
Thus, Simple Interest (SI) = $308
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $308
= $4158
Thus, Amount to be paid = $4158 Answer
Similar Questions
(1) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $7520 to clear the loan, then find the time period of the loan.
(2) If Karen paid $4424 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(3) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(4) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 2% simple interest?
(5) Calculate the amount due if Jessica borrowed a sum of $3750 at 9% simple interest for 3 years.
(6) Calculate the amount due if Michael borrowed a sum of $3300 at 5% simple interest for 3 years.
(7) Mary took a loan of $4100 at the rate of 8% simple interest per annum. If he paid an amount of $6396 to clear the loan, then find the time period of the loan.
(8) Jessica took a loan of $5500 at the rate of 7% simple interest per annum. If he paid an amount of $8965 to clear the loan, then find the time period of the loan.
(9) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $7421 to clear the loan, then find the time period of the loan.
(10) In how much time a principal of $3050 will amount to $3416 at a simple interest of 3% per annum?