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) Find the amount to be paid if Karen borrowed a sum of $5950 at 8% simple interest for 8 years.
(2) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7009 to clear the loan, then find the time period of the loan.
(3) How much loan did Ryan borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8690 to clear it?
(4) If John paid $3840 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) If Richard paid $3888 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) How much loan did Sharon borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9300 to clear it?
(7) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 3% simple interest?
(8) Calculate the amount due if Jennifer borrowed a sum of $3250 at 7% simple interest for 3 years.
(9) Lisa took a loan of $6100 at the rate of 7% simple interest per annum. If he paid an amount of $10370 to clear the loan, then find the time period of the loan.
(10) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 4% simple interest?