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) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10360 to clear the loan, then find the time period of the loan.
(2) How much loan did Matthew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6820 to clear it?
(3) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5920 to clear the loan, then find the time period of the loan.
(4) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 5% simple interest?
(5) Calculate the amount due if Linda borrowed a sum of $3350 at 9% simple interest for 4 years.
(6) If John borrowed $3200 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(7) Find the amount to be paid if Thomas borrowed a sum of $5800 at 6% simple interest for 8 years.
(8) Find the amount to be paid if Christopher borrowed a sum of $6000 at 5% simple interest for 7 years.
(9) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $9116 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if David borrowed a sum of $5400 at 5% simple interest for 7 years.