Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 6% simple interest for 4 years.
Correct Answer
$4960
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 6% × 4
= $4000 ×6/100 × 4
= 4000 × 6 × 4/100
= 24000 × 4/100
= 96000/100
= $960
Thus, Simple Interest = $960
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 + $960
= $4960
Thus, Amount to be paid = $4960 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) = 6%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 6% × 4)
= $4000 + ($4000 ×6/100 × 4)
= $4000 + (4000 × 6 × 4/100)
= $4000 + (24000 × 4/100)
= $4000 + (96000/100)
= $4000 + $960 = $4960
Thus, Amount (A) to be paid = $4960 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 $4000, the simple interest in 1 year
= 6/100 × 4000
= 6 × 4000/100
= 24000/100 = $240
Thus, simple interest for 1 year = $240
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $240 × 4 = $960
Thus, Simple Interest (SI) = $960
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $960
= $4960
Thus, Amount to be paid = $4960 Answer
Similar Questions
(1) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.
(2) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7599 to clear the loan, then find the time period of the loan.
(3) If Kimberly paid $5580 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6864 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Karen borrowed a sum of $5950 at 8% simple interest for 8 years.
(6) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $10080 to clear the loan, then find the time period of the loan.
(7) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 4% simple interest?
(8) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9112 to clear the loan, then find the time period of the loan.
(9) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 9% simple interest?
(10) How much loan did Joshua borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7590 to clear it?