Question:
Calculate the amount due if Joseph borrowed a sum of $3700 at 4% simple interest for 4 years.
Correct Answer
$4292
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 4% × 4
= $3700 ×4/100 × 4
= 3700 × 4 × 4/100
= 14800 × 4/100
= 59200/100
= $592
Thus, Simple Interest = $592
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 = $3700 + $592
= $4292
Thus, Amount to be paid = $4292 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 = $3700
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $3700 + ($3700 × 4% × 4)
= $3700 + ($3700 ×4/100 × 4)
= $3700 + (3700 × 4 × 4/100)
= $3700 + (14800 × 4/100)
= $3700 + (59200/100)
= $3700 + $592 = $4292
Thus, Amount (A) to be paid = $4292 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 $3700, the simple interest in 1 year
= 4/100 × 3700
= 4 × 3700/100
= 14800/100 = $148
Thus, simple interest for 1 year = $148
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $148 × 4 = $592
Thus, Simple Interest (SI) = $592
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $592
= $4292
Thus, Amount to be paid = $4292 Answer
Similar Questions
(1) Calculate the amount due if Richard borrowed a sum of $3600 at 9% simple interest for 3 years.
(2) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $6936 to clear the loan, then find the time period of the loan.
(3) How much loan did William borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6875 to clear it?
(4) If Charles borrowed $3900 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(5) Calculate the amount due if Charles borrowed a sum of $3900 at 6% simple interest for 4 years.
(6) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $11970 to clear the loan, then find the time period of the loan.
(7) Daniel took a loan of $6200 at the rate of 7% simple interest per annum. If he paid an amount of $8804 to clear the loan, then find the time period of the loan.
(8) Michelle had to pay $5247 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(9) If Mark paid $5280 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 5% simple interest?