Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 3% simple interest for 4 years.
Correct Answer
$4480
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 3% × 4
= $4000 ×3/100 × 4
= 4000 × 3 × 4/100
= 12000 × 4/100
= 48000/100
= $480
Thus, Simple Interest = $480
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 = $4000 + $480
= $4480
Thus, Amount to be paid = $4480 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 = $4000
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 3% × 4)
= $4000 + ($4000 ×3/100 × 4)
= $4000 + (4000 × 3 × 4/100)
= $4000 + (12000 × 4/100)
= $4000 + (48000/100)
= $4000 + $480 = $4480
Thus, Amount (A) to be paid = $4480 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 $4000, the simple interest in 1 year
= 3/100 × 4000
= 3 × 4000/100
= 12000/100 = $120
Thus, simple interest for 1 year = $120
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $120 × 4 = $480
Thus, Simple Interest (SI) = $480
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $480
= $4480
Thus, Amount to be paid = $4480 Answer
Similar Questions
(1) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7100 to clear the loan, then find the time period of the loan.
(2) If Elizabeth borrowed $3450 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(3) James had to pay $3450 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(4) What amount does James have to pay after 6 years if he takes a loan of $3000 at 4% simple interest?
(5) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $9620 to clear the loan, then find the time period of the loan.
(6) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5920 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if David borrowed a sum of $3400 at 6% simple interest for 3 years.
(8) Matthew had to pay $4452 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(9) Jessica had to pay $3975 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(10) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.