Question:
Calculate the amount due if Jennifer borrowed a sum of $3250 at 5% simple interest for 4 years.
Correct Answer
$3900
Solution And Explanation
Solution
Given,
Principal (P) = $3250
Rate of Simple Interest (SI) = 5%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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) = $3250 × 5% × 4
= $3250 ×5/100 × 4
= 3250 × 5 × 4/100
= 16250 × 4/100
= 65000/100
= $650
Thus, Simple Interest = $650
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 = $3250 + $650
= $3900
Thus, Amount to be paid = $3900 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 = $3250
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 4 years
Thus, Amount (A)
= $3250 + ($3250 × 5% × 4)
= $3250 + ($3250 ×5/100 × 4)
= $3250 + (3250 × 5 × 4/100)
= $3250 + (16250 × 4/100)
= $3250 + (65000/100)
= $3250 + $650 = $3900
Thus, Amount (A) to be paid = $3900 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $3250, the simple interest in 1 year
= 5/100 × 3250
= 5 × 3250/100
= 16250/100 = $162.5
Thus, simple interest for 1 year = $162.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $162.5 × 4 = $650
Thus, Simple Interest (SI) = $650
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3250 + $650
= $3900
Thus, Amount to be paid = $3900 Answer
Similar Questions
(1) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $8840 to clear the loan, then find the time period of the loan.
(2) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9437.5 to clear it?
(3) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(4) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 6% simple interest?
(5) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 6% simple interest?
(6) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 4 years.
(7) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 7 years.
(8) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $11584 to clear the loan, then find the time period of the loan.
(9) In how much time a principal of $3200 will amount to $3520 at a simple interest of 5% per annum?
(10) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.