Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 4% simple interest for 4 years.
Correct Answer
$4640
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 4% × 4
= $4000 ×4/100 × 4
= 4000 × 4 × 4/100
= 16000 × 4/100
= 64000/100
= $640
Thus, Simple Interest = $640
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 = $4000 + $640
= $4640
Thus, Amount to be paid = $4640 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 = $4000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 4% × 4)
= $4000 + ($4000 ×4/100 × 4)
= $4000 + (4000 × 4 × 4/100)
= $4000 + (16000 × 4/100)
= $4000 + (64000/100)
= $4000 + $640 = $4640
Thus, Amount (A) to be paid = $4640 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 $4000, the simple interest in 1 year
= 4/100 × 4000
= 4 × 4000/100
= 16000/100 = $160
Thus, simple interest for 1 year = $160
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $160 × 4 = $640
Thus, Simple Interest (SI) = $640
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $640
= $4640
Thus, Amount to be paid = $4640 Answer
Similar Questions
(1) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 6% simple interest?
(2) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(3) What amount will be due after 2 years if Daniel borrowed a sum of $3550 at a 6% simple interest?
(4) Find the amount to be paid if Jessica borrowed a sum of $5750 at 8% simple interest for 8 years.
(5) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 7% simple interest.
(6) What amount does John have to pay after 5 years if he takes a loan of $3200 at 2% simple interest?
(7) Sarah took a loan of $5700 at the rate of 9% simple interest per annum. If he paid an amount of $8778 to clear the loan, then find the time period of the loan.
(8) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $9000 to clear the loan, then find the time period of the loan.
(9) How much loan did Mary borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6060 to clear it?
(10) Calculate the amount due if Joseph borrowed a sum of $3700 at 2% simple interest for 4 years.