Question:
Calculate the amount due if Richard borrowed a sum of $3600 at 5% simple interest for 4 years.
Correct Answer
$4320
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 5% × 4
= $3600 ×5/100 × 4
= 3600 × 5 × 4/100
= 18000 × 4/100
= 72000/100
= $720
Thus, Simple Interest = $720
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 = $3600 + $720
= $4320
Thus, Amount to be paid = $4320 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 = $3600
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 4 years
Thus, Amount (A)
= $3600 + ($3600 × 5% × 4)
= $3600 + ($3600 ×5/100 × 4)
= $3600 + (3600 × 5 × 4/100)
= $3600 + (18000 × 4/100)
= $3600 + (72000/100)
= $3600 + $720 = $4320
Thus, Amount (A) to be paid = $4320 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 $3600, the simple interest in 1 year
= 5/100 × 3600
= 5 × 3600/100
= 18000/100 = $180
Thus, simple interest for 1 year = $180
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $180 × 4 = $720
Thus, Simple Interest (SI) = $720
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $720
= $4320
Thus, Amount to be paid = $4320 Answer
Similar Questions
(1) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 7% simple interest?
(2) Mary took a loan of $4100 at the rate of 8% simple interest per annum. If he paid an amount of $6724 to clear the loan, then find the time period of the loan.
(3) David took a loan of $4800 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(4) Anthony had to pay $4945 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Robert took a loan of $4200 at the rate of 6% simple interest per annum. If he paid an amount of $6720 to clear the loan, then find the time period of the loan.
(6) If Steven paid $5152 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $8268 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if John borrowed a sum of $5200 at 9% simple interest for 7 years.
(9) Find the amount to be paid if Sarah borrowed a sum of $5850 at 8% simple interest for 7 years.
(10) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 10% simple interest?