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 Mary have to pay after 6 years if he takes a loan of $3050 at 8% simple interest?
(2) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 8 years.
(3) How much loan did Carol borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8107.5 to clear it?
(4) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $8946 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 10% simple interest.
(6) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $8740 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Jennifer borrowed a sum of $3250 at 7% simple interest for 3 years.
(8) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $6880 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Michael borrowed a sum of $5300 at 3% simple interest for 7 years.
(10) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 7% simple interest.