Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 4 years.
Correct Answer
$4740
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 5% × 4
= $3950 ×5/100 × 4
= 3950 × 5 × 4/100
= 19750 × 4/100
= 79000/100
= $790
Thus, Simple Interest = $790
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 = $3950 + $790
= $4740
Thus, Amount to be paid = $4740 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 = $3950
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 5% × 4)
= $3950 + ($3950 ×5/100 × 4)
= $3950 + (3950 × 5 × 4/100)
= $3950 + (19750 × 4/100)
= $3950 + (79000/100)
= $3950 + $790 = $4740
Thus, Amount (A) to be paid = $4740 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 $3950, the simple interest in 1 year
= 5/100 × 3950
= 5 × 3950/100
= 19750/100 = $197.5
Thus, simple interest for 1 year = $197.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $197.5 × 4 = $790
Thus, Simple Interest (SI) = $790
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $790
= $4740
Thus, Amount to be paid = $4740 Answer
Similar Questions
(1) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $10106 to clear the loan, then find the time period of the loan.
(2) Anthony took a loan of $6600 at the rate of 6% simple interest per annum. If he paid an amount of $8976 to clear the loan, then find the time period of the loan.
(3) What amount does David have to pay after 5 years if he takes a loan of $3400 at 9% simple interest?
(4) How much loan did Emily borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8100 to clear it?
(5) Find the amount to be paid if Barbara borrowed a sum of $5550 at 7% simple interest for 8 years.
(6) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 6% simple interest.
(7) Find the amount to be paid if Richard borrowed a sum of $5600 at 10% simple interest for 7 years.
(8) What amount will be due after 2 years if William borrowed a sum of $3250 at a 9% simple interest?
(9) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7980 to clear it?
(10) Find the amount to be paid if William borrowed a sum of $5500 at 3% simple interest for 7 years.