Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 7% simple interest for 4 years.
Correct Answer
$5120
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 7% × 4
= $4000 ×7/100 × 4
= 4000 × 7 × 4/100
= 28000 × 4/100
= 112000/100
= $1120
Thus, Simple Interest = $1120
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 = $4000 + $1120
= $5120
Thus, Amount to be paid = $5120 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 = $4000
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 7% × 4)
= $4000 + ($4000 ×7/100 × 4)
= $4000 + (4000 × 7 × 4/100)
= $4000 + (28000 × 4/100)
= $4000 + (112000/100)
= $4000 + $1120 = $5120
Thus, Amount (A) to be paid = $5120 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 $4000, the simple interest in 1 year
= 7/100 × 4000
= 7 × 4000/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $280 × 4 = $1120
Thus, Simple Interest (SI) = $1120
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1120
= $5120
Thus, Amount to be paid = $5120 Answer
Similar Questions
(1) How much loan did Rebecca borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9562.5 to clear it?
(2) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 5% simple interest?
(3) Find the amount to be paid if Mary borrowed a sum of $5050 at 6% simple interest for 7 years.
(4) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 7% simple interest?
(5) What amount does William have to pay after 6 years if he takes a loan of $3500 at 6% simple interest?
(6) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 7% simple interest for 7 years.
(7) Calculate the amount due if Barbara borrowed a sum of $3550 at 2% simple interest for 3 years.
(8) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 6% simple interest.
(9) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 6% simple interest.
(10) Find the amount to be paid if James borrowed a sum of $5000 at 6% simple interest for 7 years.