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 Barbara have to pay after 5 years if he takes a loan of $3550 at 5% simple interest?
(2) Mark took a loan of $6800 at the rate of 7% simple interest per annum. If he paid an amount of $10608 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 4 years.
(4) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 7% simple interest.
(5) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $7600 to clear the loan, then find the time period of the loan.
(6) If Matthew paid $4536 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(7) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $7824 to clear the loan, then find the time period of the loan.
(8) Christopher took a loan of $6000 at the rate of 10% simple interest per annum. If he paid an amount of $12000 to clear the loan, then find the time period of the loan.
(9) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $6776 to clear the loan, then find the time period of the loan.
(10) Mark took a loan of $6800 at the rate of 7% simple interest per annum. If he paid an amount of $10132 to clear the loan, then find the time period of the loan.