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) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(2) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 2% simple interest?
(3) How much loan did John borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5980 to clear it?
(4) If Jennifer borrowed $3250 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(5) Find the amount to be paid if William borrowed a sum of $5500 at 7% simple interest for 8 years.
(6) Find the amount to be paid if Jessica borrowed a sum of $5750 at 6% simple interest for 8 years.
(7) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 6% simple interest?
(8) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 7% simple interest.
(9) 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?
(10) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $7020 to clear the loan, then find the time period of the loan.