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) If Linda borrowed $3350 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(2) How much loan did Kevin borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8520 to clear it?
(3) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(4) Mary took a loan of $4100 at the rate of 8% simple interest per annum. If he paid an amount of $6724 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 9% simple interest.
(6) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 10% simple interest?
(7) Calculate the amount due if William borrowed a sum of $3500 at 7% simple interest for 3 years.
(8) Thomas took a loan of $5600 at the rate of 10% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(9) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $9280 to clear the loan, then find the time period of the loan.
(10) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 10% simple interest?