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) What amount does James have to pay after 5 years if he takes a loan of $3000 at 2% simple interest?
(2) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(3) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 9% simple interest?
(4) Sarah took a loan of $5700 at the rate of 8% simple interest per annum. If he paid an amount of $8436 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Thomas borrowed a sum of $5800 at 8% simple interest for 8 years.
(6) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 8% simple interest?
(7) Calculate the amount due if Patricia borrowed a sum of $3150 at 3% simple interest for 3 years.
(8) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
(9) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 7 years.
(10) What amount will be due after 2 years if David borrowed a sum of $3200 at a 5% simple interest?