Question:
Calculate the amount due if Sarah borrowed a sum of $3850 at 10% simple interest for 4 years.
Correct Answer
$5390
Solution And Explanation
Solution
Given,
Principal (P) = $3850
Rate of Simple Interest (SI) = 10%
Time (t) = 4 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 10% simple interest means, Rate of Simple Interest (SI) is 10% 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 × 10% × 4
= $3850 ×10/100 × 4
= 3850 × 10 × 4/100
= 38500 × 4/100
= 154000/100
= $1540
Thus, Simple Interest = $1540
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 + $1540
= $5390
Thus, Amount to be paid = $5390 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) = 10%
And, Time (t) = 4 years
Thus, Amount (A)
= $3850 + ($3850 × 10% × 4)
= $3850 + ($3850 ×10/100 × 4)
= $3850 + (3850 × 10 × 4/100)
= $3850 + (38500 × 4/100)
= $3850 + (154000/100)
= $3850 + $1540 = $5390
Thus, Amount (A) to be paid = $5390 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 10%
This, means, $10 per $100 per year
∵ For $100, the simple interest for 1 year = $10
∴ For $1, the simple interest for 1 year = 10/100
∴ For $3850, the simple interest in 1 year
= 10/100 × 3850
= 10 × 3850/100
= 38500/100 = $385
Thus, simple interest for 1 year = $385
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $385 × 4 = $1540
Thus, Simple Interest (SI) = $1540
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $1540
= $5390
Thus, Amount to be paid = $5390 Answer
Similar Questions
(1) Patricia took a loan of $4300 at the rate of 9% simple interest per annum. If he paid an amount of $7396 to clear the loan, then find the time period of the loan.
(2) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 4% simple interest?
(3) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $7956 to clear the loan, then find the time period of the loan.
(4) How much loan did Laura borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8635 to clear it?
(5) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 9% simple interest?
(6) How much loan did Paul borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7705 to clear it?
(7) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 10% simple interest?
(8) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 3% simple interest.
(9) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 2% simple interest.
(10) How much loan did Deborah borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8567.5 to clear it?