Question:
Calculate the amount due if David borrowed a sum of $3400 at 4% simple interest for 4 years.
Correct Answer
$3944
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 4%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $3400 × 4% × 4
= $3400 ×4/100 × 4
= 3400 × 4 × 4/100
= 13600 × 4/100
= 54400/100
= $544
Thus, Simple Interest = $544
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 = $3400 + $544
= $3944
Thus, Amount to be paid = $3944 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 = $3400
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $3400 + ($3400 × 4% × 4)
= $3400 + ($3400 ×4/100 × 4)
= $3400 + (3400 × 4 × 4/100)
= $3400 + (13600 × 4/100)
= $3400 + (54400/100)
= $3400 + $544 = $3944
Thus, Amount (A) to be paid = $3944 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $3400, the simple interest in 1 year
= 4/100 × 3400
= 4 × 3400/100
= 13600/100 = $136
Thus, simple interest for 1 year = $136
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $136 × 4 = $544
Thus, Simple Interest (SI) = $544
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $544
= $3944
Thus, Amount to be paid = $3944 Answer
Similar Questions
(1) Andrew had to pay $5232 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 5% simple interest.
(3) Find the amount to be paid if Joseph borrowed a sum of $5700 at 8% simple interest for 7 years.
(4) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 7% simple interest?
(5) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $10281 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Mary borrowed a sum of $3050 at 7% simple interest for 4 years.
(7) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $7952 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 10% simple interest for 8 years.
(9) Calculate the amount due if Barbara borrowed a sum of $3550 at 5% simple interest for 3 years.
(10) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7647.5 to clear it?