Question:
Calculate the amount due if Elizabeth borrowed a sum of $3450 at 4% simple interest for 4 years.
Correct Answer
$4002
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 4% × 4
= $3450 ×4/100 × 4
= 3450 × 4 × 4/100
= 13800 × 4/100
= 55200/100
= $552
Thus, Simple Interest = $552
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 = $3450 + $552
= $4002
Thus, Amount to be paid = $4002 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 = $3450
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $3450 + ($3450 × 4% × 4)
= $3450 + ($3450 ×4/100 × 4)
= $3450 + (3450 × 4 × 4/100)
= $3450 + (13800 × 4/100)
= $3450 + (55200/100)
= $3450 + $552 = $4002
Thus, Amount (A) to be paid = $4002 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 $3450, the simple interest in 1 year
= 4/100 × 3450
= 4 × 3450/100
= 13800/100 = $138
Thus, simple interest for 1 year = $138
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $138 × 4 = $552
Thus, Simple Interest (SI) = $552
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $552
= $4002
Thus, Amount to be paid = $4002 Answer
Similar Questions
(1) Find the amount to be paid if Jessica borrowed a sum of $5750 at 3% simple interest for 8 years.
(2) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 4 years.
(3) How much loan did Thomas borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6380 to clear it?
(4) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $10780 to clear the loan, then find the time period of the loan.
(5) Emily had to pay $5177.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $10595 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if Sarah borrowed a sum of $5850 at 6% simple interest for 7 years.
(8) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.
(9) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $8600 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.