Question:
Calculate the amount due if Mary borrowed a sum of $3050 at 7% simple interest for 4 years.
Correct Answer
$3904
Solution And Explanation
Solution
Given,
Principal (P) = $3050
Rate of Simple Interest (SI) = 7%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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) = $3050 × 7% × 4
= $3050 ×7/100 × 4
= 3050 × 7 × 4/100
= 21350 × 4/100
= 85400/100
= $854
Thus, Simple Interest = $854
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 = $3050 + $854
= $3904
Thus, Amount to be paid = $3904 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 = $3050
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 4 years
Thus, Amount (A)
= $3050 + ($3050 × 7% × 4)
= $3050 + ($3050 ×7/100 × 4)
= $3050 + (3050 × 7 × 4/100)
= $3050 + (21350 × 4/100)
= $3050 + (85400/100)
= $3050 + $854 = $3904
Thus, Amount (A) to be paid = $3904 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $3050, the simple interest in 1 year
= 7/100 × 3050
= 7 × 3050/100
= 21350/100 = $213.5
Thus, simple interest for 1 year = $213.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $213.5 × 4 = $854
Thus, Simple Interest (SI) = $854
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3050 + $854
= $3904
Thus, Amount to be paid = $3904 Answer
Similar Questions
(1) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8700 to clear it?
(2) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 8 years.
(3) Find the amount to be paid if Karen borrowed a sum of $5950 at 3% simple interest for 8 years.
(4) Find the amount to be paid if Thomas borrowed a sum of $5800 at 4% simple interest for 7 years.
(5) Find the amount to be paid if Sarah borrowed a sum of $5850 at 6% simple interest for 8 years.
(6) How much loan did Robert borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5610 to clear it?
(7) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $10626 to clear the loan, then find the time period of the loan.
(8) 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.
(9) If Margaret paid $5046 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(10) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $10921 to clear the loan, then find the time period of the loan.