Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 4% simple interest for 4 years.
Correct Answer
$4582
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 4% × 4
= $3950 ×4/100 × 4
= 3950 × 4 × 4/100
= 15800 × 4/100
= 63200/100
= $632
Thus, Simple Interest = $632
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 = $3950 + $632
= $4582
Thus, Amount to be paid = $4582 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 = $3950
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 4% × 4)
= $3950 + ($3950 ×4/100 × 4)
= $3950 + (3950 × 4 × 4/100)
= $3950 + (15800 × 4/100)
= $3950 + (63200/100)
= $3950 + $632 = $4582
Thus, Amount (A) to be paid = $4582 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 $3950, the simple interest in 1 year
= 4/100 × 3950
= 4 × 3950/100
= 15800/100 = $158
Thus, simple interest for 1 year = $158
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $158 × 4 = $632
Thus, Simple Interest (SI) = $632
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $632
= $4582
Thus, Amount to be paid = $4582 Answer
Similar Questions
(1) Richard took a loan of $5200 at the rate of 6% simple interest per annum. If he paid an amount of $7072 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Jennifer borrowed a sum of $3250 at 6% simple interest for 4 years.
(3) How much loan did Michael borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6625 to clear it?
(4) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 6% simple interest?
(5) Find the amount to be paid if Robert borrowed a sum of $5100 at 9% simple interest for 8 years.
(6) Calculate the amount due if Mary borrowed a sum of $3050 at 10% simple interest for 4 years.
(7) Jessica had to pay $4200 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(8) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 5% simple interest for 4 years.
(9) In how much time a principal of $3000 will amount to $3270 at a simple interest of 3% per annum?
(10) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $11222 to clear the loan, then find the time period of the loan.