Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 10% simple interest for 4 years.
Correct Answer
$5530
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 10% × 4
= $3950 ×10/100 × 4
= 3950 × 10 × 4/100
= 39500 × 4/100
= 158000/100
= $1580
Thus, Simple Interest = $1580
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 = $3950 + $1580
= $5530
Thus, Amount to be paid = $5530 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 = $3950
Rate of Simple Interest (SI) or (R) = 10%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 10% × 4)
= $3950 + ($3950 ×10/100 × 4)
= $3950 + (3950 × 10 × 4/100)
= $3950 + (39500 × 4/100)
= $3950 + (158000/100)
= $3950 + $1580 = $5530
Thus, Amount (A) to be paid = $5530 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 $3950, the simple interest in 1 year
= 10/100 × 3950
= 10 × 3950/100
= 39500/100 = $395
Thus, simple interest for 1 year = $395
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $395 × 4 = $1580
Thus, Simple Interest (SI) = $1580
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1580
= $5530
Thus, Amount to be paid = $5530 Answer
Similar Questions
(1) If Mary paid $3416 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(2) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 3% simple interest?
(3) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 4% simple interest?
(4) How much loan did Ryan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9480 to clear it?
(5) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12920 to clear the loan, then find the time period of the loan.
(6) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 6% simple interest?
(7) How much loan did Brian borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7920 to clear it?
(8) Calculate the amount due if Richard borrowed a sum of $3600 at 7% simple interest for 4 years.
(9) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 2% simple interest?
(10) Find the amount to be paid if Patricia borrowed a sum of $5150 at 5% simple interest for 7 years.