Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 5% simple interest for 4 years.
Correct Answer
$4800
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 5% × 4
= $4000 ×5/100 × 4
= 4000 × 5 × 4/100
= 20000 × 4/100
= 80000/100
= $800
Thus, Simple Interest = $800
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 = $4000 + $800
= $4800
Thus, Amount to be paid = $4800 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 = $4000
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 5% × 4)
= $4000 + ($4000 ×5/100 × 4)
= $4000 + (4000 × 5 × 4/100)
= $4000 + (20000 × 4/100)
= $4000 + (80000/100)
= $4000 + $800 = $4800
Thus, Amount (A) to be paid = $4800 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 $4000, the simple interest in 1 year
= 5/100 × 4000
= 5 × 4000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $200 × 4 = $800
Thus, Simple Interest (SI) = $800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $800
= $4800
Thus, Amount to be paid = $4800 Answer
Similar Questions
(1) Elizabeth had to pay $3967.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(2) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 3% simple interest?
(3) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(4) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 3% simple interest?
(5) In how much time a principal of $3100 will amount to $3472 at a simple interest of 3% per annum?
(6) Ashley had to pay $5232.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(7) If Thomas borrowed $3800 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(8) Calculate the amount due if Jessica borrowed a sum of $3750 at 2% simple interest for 3 years.
(9) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 10% simple interest?
(10) If Karen paid $4266 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.