Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 4 years.
Correct Answer
$4898
Solution And Explanation
Solution
Given,
Principal (P) = $3950
Rate of Simple Interest (SI) = 6%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 6% simple interest means, Rate of Simple Interest (SI) is 6% 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 × 6% × 4
= $3950 ×6/100 × 4
= 3950 × 6 × 4/100
= 23700 × 4/100
= 94800/100
= $948
Thus, Simple Interest = $948
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 + $948
= $4898
Thus, Amount to be paid = $4898 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) = 6%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 6% × 4)
= $3950 + ($3950 ×6/100 × 4)
= $3950 + (3950 × 6 × 4/100)
= $3950 + (23700 × 4/100)
= $3950 + (94800/100)
= $3950 + $948 = $4898
Thus, Amount (A) to be paid = $4898 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 6%
This, means, $6 per $100 per year
∵ For $100, the simple interest for 1 year = $6
∴ For $1, the simple interest for 1 year = 6/100
∴ For $3950, the simple interest in 1 year
= 6/100 × 3950
= 6 × 3950/100
= 23700/100 = $237
Thus, simple interest for 1 year = $237
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $237 × 4 = $948
Thus, Simple Interest (SI) = $948
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $948
= $4898
Thus, Amount to be paid = $4898 Answer
Similar Questions
(1) Christopher took a loan of $6000 at the rate of 10% simple interest per annum. If he paid an amount of $10200 to clear the loan, then find the time period of the loan.
(2) In how much time a principal of $3100 will amount to $3410 at a simple interest of 2% per annum?
(3) If Richard paid $4320 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) How much loan did Barbara borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6660 to clear it?
(5) Find the amount to be paid if James borrowed a sum of $5000 at 7% simple interest for 8 years.
(6) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 6% simple interest.
(7) In how much time a principal of $3100 will amount to $3286 at a simple interest of 2% per annum?
(8) How much loan did Andrew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7480 to clear it?
(9) Find the amount to be paid if Susan borrowed a sum of $5650 at 6% simple interest for 7 years.
(10) What amount will be due after 2 years if William borrowed a sum of $3250 at a 8% simple interest?