Question:
Calculate the amount due if Sarah borrowed a sum of $3850 at 7% simple interest for 4 years.
Correct Answer
$4928
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 7% × 4
= $3850 ×7/100 × 4
= 3850 × 7 × 4/100
= 26950 × 4/100
= 107800/100
= $1078
Thus, Simple Interest = $1078
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 = $3850 + $1078
= $4928
Thus, Amount to be paid = $4928 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 = $3850
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 4 years
Thus, Amount (A)
= $3850 + ($3850 × 7% × 4)
= $3850 + ($3850 ×7/100 × 4)
= $3850 + (3850 × 7 × 4/100)
= $3850 + (26950 × 4/100)
= $3850 + (107800/100)
= $3850 + $1078 = $4928
Thus, Amount (A) to be paid = $4928 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 $3850, the simple interest in 1 year
= 7/100 × 3850
= 7 × 3850/100
= 26950/100 = $269.5
Thus, simple interest for 1 year = $269.5
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $269.5 × 4 = $1078
Thus, Simple Interest (SI) = $1078
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $1078
= $4928
Thus, Amount to be paid = $4928 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 5% simple interest.
(2) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 9% simple interest.
(3) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 6% simple interest.
(4) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 9% simple interest?
(5) Calculate the amount due if Jessica borrowed a sum of $3750 at 7% simple interest for 4 years.
(6) If Charles borrowed $3900 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(7) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 8% simple interest?
(8) What amount does William have to pay after 5 years if he takes a loan of $3500 at 8% simple interest?
(9) Richard had to pay $3924 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(10) What amount does David have to pay after 5 years if he takes a loan of $3400 at 3% simple interest?