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 Linda borrowed a sum of $5350 at 3% simple interest for 8 years.
(2) Find the amount to be paid if Joseph borrowed a sum of $5700 at 4% simple interest for 7 years.
(3) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 4 years.
(4) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 3% simple interest?
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 10% simple interest for 4 years.
(6) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $11780 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 8% simple interest?
(8) Find the amount to be paid if Linda borrowed a sum of $5350 at 2% simple interest for 7 years.
(9) In how much time a principal of $3050 will amount to $3538 at a simple interest of 4% per annum?
(10) Find the amount to be paid if Christopher borrowed a sum of $6000 at 5% simple interest for 7 years.