Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 2% simple interest for 4 years.
Correct Answer
$4266
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 2% × 4
= $3950 ×2/100 × 4
= 3950 × 2 × 4/100
= 7900 × 4/100
= 31600/100
= $316
Thus, Simple Interest = $316
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 = $3950 + $316
= $4266
Thus, Amount to be paid = $4266 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 = $3950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 2% × 4)
= $3950 + ($3950 ×2/100 × 4)
= $3950 + (3950 × 2 × 4/100)
= $3950 + (7900 × 4/100)
= $3950 + (31600/100)
= $3950 + $316 = $4266
Thus, Amount (A) to be paid = $4266 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 $3950, the simple interest in 1 year
= 2/100 × 3950
= 2 × 3950/100
= 7900/100 = $79
Thus, simple interest for 1 year = $79
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $79 × 4 = $316
Thus, Simple Interest (SI) = $316
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $316
= $4266
Thus, Amount to be paid = $4266 Answer
Similar Questions
(1) Karen took a loan of $5900 at the rate of 6% simple interest per annum. If he paid an amount of $9440 to clear the loan, then find the time period of the loan.
(2) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $8704 to clear the loan, then find the time period of the loan.
(3) What amount does John have to pay after 5 years if he takes a loan of $3200 at 7% simple interest?
(4) If Mark paid $5104 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(5) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 10% simple interest?
(6) What amount will be due after 2 years if James borrowed a sum of $3000 at a 8% simple interest?
(7) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 8% simple interest?
(8) How much loan did Linda borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5885 to clear it?
(9) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 6% simple interest?
(10) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 10% simple interest.