Question:
Calculate the amount due if Jessica borrowed a sum of $3750 at 4% simple interest for 4 years.
Correct Answer
$4350
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 4% × 4
= $3750 ×4/100 × 4
= 3750 × 4 × 4/100
= 15000 × 4/100
= 60000/100
= $600
Thus, Simple Interest = $600
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 = $3750 + $600
= $4350
Thus, Amount to be paid = $4350 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 = $3750
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $3750 + ($3750 × 4% × 4)
= $3750 + ($3750 ×4/100 × 4)
= $3750 + (3750 × 4 × 4/100)
= $3750 + (15000 × 4/100)
= $3750 + (60000/100)
= $3750 + $600 = $4350
Thus, Amount (A) to be paid = $4350 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 $3750, the simple interest in 1 year
= 4/100 × 3750
= 4 × 3750/100
= 15000/100 = $150
Thus, simple interest for 1 year = $150
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $150 × 4 = $600
Thus, Simple Interest (SI) = $600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $600
= $4350
Thus, Amount to be paid = $4350 Answer
Similar Questions
(1) How much loan did William borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6325 to clear it?
(2) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 9% simple interest.
(3) Michael took a loan of $4600 at the rate of 9% simple interest per annum. If he paid an amount of $8740 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Barbara borrowed a sum of $3550 at 7% simple interest for 4 years.
(5) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 10% simple interest?
(6) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6622 to clear the loan, then find the time period of the loan.
(7) Susan took a loan of $5300 at the rate of 7% simple interest per annum. If he paid an amount of $8268 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 3% simple interest.
(9) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $7335 to clear the loan, then find the time period of the loan.
(10) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $8704 to clear the loan, then find the time period of the loan.