Question:
Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 4 years.
Correct Answer
$4416
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 7% × 4
= $3450 ×7/100 × 4
= 3450 × 7 × 4/100
= 24150 × 4/100
= 96600/100
= $966
Thus, Simple Interest = $966
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 = $3450 + $966
= $4416
Thus, Amount to be paid = $4416 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 = $3450
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 4 years
Thus, Amount (A)
= $3450 + ($3450 × 7% × 4)
= $3450 + ($3450 ×7/100 × 4)
= $3450 + (3450 × 7 × 4/100)
= $3450 + (24150 × 4/100)
= $3450 + (96600/100)
= $3450 + $966 = $4416
Thus, Amount (A) to be paid = $4416 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 $3450, the simple interest in 1 year
= 7/100 × 3450
= 7 × 3450/100
= 24150/100 = $241.5
Thus, simple interest for 1 year = $241.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $241.5 × 4 = $966
Thus, Simple Interest (SI) = $966
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $966
= $4416
Thus, Amount to be paid = $4416 Answer
Similar Questions
(1) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 6% simple interest?
(2) Find the amount to be paid if Joseph borrowed a sum of $5700 at 6% simple interest for 7 years.
(3) How much loan did Steven borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8250 to clear it?
(4) If Karen paid $4424 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(5) If Joshua paid $5684 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) How much loan did Jason borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9240 to clear it?
(7) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(8) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5995 to clear it?
(9) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $7844 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if William borrowed a sum of $3500 at 10% simple interest for 4 years.