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) Calculate the amount due if Linda borrowed a sum of $3350 at 3% simple interest for 4 years.
(2) How much loan did Christopher borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6900 to clear it?
(3) Nancy had to pay $4772.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(4) Lisa took a loan of $6100 at the rate of 9% simple interest per annum. If he paid an amount of $11590 to clear the loan, then find the time period of the loan.
(5) How much loan did Michael borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6625 to clear it?
(6) What amount does James have to pay after 5 years if he takes a loan of $3000 at 10% simple interest?
(7) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 6% simple interest.
(8) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8580 to clear it?
(9) How much loan did Thomas borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6380 to clear it?
(10) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 4% simple interest.