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) Find the amount to be paid if Susan borrowed a sum of $5650 at 2% simple interest for 8 years.
(2) What amount will be due after 2 years if Richard borrowed a sum of $3300 at a 5% simple interest?
(3) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 5% simple interest?
(4) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $8320 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 3% simple interest for 3 years.
(6) Find the amount to be paid if Susan borrowed a sum of $5650 at 4% simple interest for 8 years.
(7) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 4% simple interest for 7 years.
(8) Calculate the amount due if Patricia borrowed a sum of $3150 at 8% simple interest for 3 years.
(9) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 3% simple interest?
(10) Susan took a loan of $5300 at the rate of 7% simple interest per annum. If he paid an amount of $9010 to clear the loan, then find the time period of the loan.