Question:
Calculate the amount due if Thomas borrowed a sum of $3800 at 7% simple interest for 4 years.
Correct Answer
$4864
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 7% × 4
= $3800 ×7/100 × 4
= 3800 × 7 × 4/100
= 26600 × 4/100
= 106400/100
= $1064
Thus, Simple Interest = $1064
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 = $3800 + $1064
= $4864
Thus, Amount to be paid = $4864 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 = $3800
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 4 years
Thus, Amount (A)
= $3800 + ($3800 × 7% × 4)
= $3800 + ($3800 ×7/100 × 4)
= $3800 + (3800 × 7 × 4/100)
= $3800 + (26600 × 4/100)
= $3800 + (106400/100)
= $3800 + $1064 = $4864
Thus, Amount (A) to be paid = $4864 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 $3800, the simple interest in 1 year
= 7/100 × 3800
= 7 × 3800/100
= 26600/100 = $266
Thus, simple interest for 1 year = $266
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $266 × 4 = $1064
Thus, Simple Interest (SI) = $1064
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $1064
= $4864
Thus, Amount to be paid = $4864 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 4% simple interest?
(2) Calculate the amount due if Barbara borrowed a sum of $3550 at 7% simple interest for 3 years.
(3) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7332 to clear the loan, then find the time period of the loan.
(4) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 8% simple interest?
(5) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $7800 to clear the loan, then find the time period of the loan.
(6) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $9204 to clear the loan, then find the time period of the loan.
(7) How much loan did Kevin borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8875 to clear it?
(8) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9856 to clear the loan, then find the time period of the loan.
(9) Kimberly had to pay $4929 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(10) Find the amount to be paid if Sarah borrowed a sum of $5850 at 7% simple interest for 8 years.