Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 3% simple interest for 4 years.
Correct Answer
$4424
Solution And Explanation
Solution
Given,
Principal (P) = $3950
Rate of Simple Interest (SI) = 3%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 3% simple interest means, Rate of Simple Interest (SI) is 3% 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 × 3% × 4
= $3950 ×3/100 × 4
= 3950 × 3 × 4/100
= 11850 × 4/100
= 47400/100
= $474
Thus, Simple Interest = $474
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 + $474
= $4424
Thus, Amount to be paid = $4424 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) = 3%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 3% × 4)
= $3950 + ($3950 ×3/100 × 4)
= $3950 + (3950 × 3 × 4/100)
= $3950 + (11850 × 4/100)
= $3950 + (47400/100)
= $3950 + $474 = $4424
Thus, Amount (A) to be paid = $4424 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 3%
This, means, $3 per $100 per year
∵ For $100, the simple interest for 1 year = $3
∴ For $1, the simple interest for 1 year = 3/100
∴ For $3950, the simple interest in 1 year
= 3/100 × 3950
= 3 × 3950/100
= 11850/100 = $118.5
Thus, simple interest for 1 year = $118.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $118.5 × 4 = $474
Thus, Simple Interest (SI) = $474
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $474
= $4424
Thus, Amount to be paid = $4424 Answer
Similar Questions
(1) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 3% simple interest?
(2) Richard took a loan of $5200 at the rate of 9% simple interest per annum. If he paid an amount of $9880 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Susan borrowed a sum of $3650 at 2% simple interest for 3 years.
(4) Find the amount to be paid if Robert borrowed a sum of $5100 at 6% simple interest for 8 years.
(5) Calculate the amount due if Robert borrowed a sum of $3100 at 5% simple interest for 4 years.
(6) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $11160 to clear the loan, then find the time period of the loan.
(7) John took a loan of $4400 at the rate of 9% simple interest per annum. If he paid an amount of $7964 to clear the loan, then find the time period of the loan.
(8) Richard took a loan of $5200 at the rate of 9% simple interest per annum. If he paid an amount of $8008 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 6% simple interest?
(10) How much loan did Mark borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7360 to clear it?