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) Find the amount to be paid if William borrowed a sum of $5500 at 2% simple interest for 7 years.
(2) How much loan did Andrew borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7820 to clear it?
(3) Robert had to pay $3379 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(4) How much loan did Lisa borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7562.5 to clear it?
(5) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 9% simple interest?
(6) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $12489 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if Barbara borrowed a sum of $5550 at 3% simple interest for 8 years.
(8) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $6532 to clear the loan, then find the time period of the loan.
(9) What amount does John have to pay after 6 years if he takes a loan of $3200 at 5% simple interest?
(10) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 9% simple interest?