Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 10% simple interest for 4 years.
Correct Answer
$5600
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 10% × 4
= $4000 ×10/100 × 4
= 4000 × 10 × 4/100
= 40000 × 4/100
= 160000/100
= $1600
Thus, Simple Interest = $1600
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 + $1600
= $5600
Thus, Amount to be paid = $5600 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) = 10%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 10% × 4)
= $4000 + ($4000 ×10/100 × 4)
= $4000 + (4000 × 10 × 4/100)
= $4000 + (40000 × 4/100)
= $4000 + (160000/100)
= $4000 + $1600 = $5600
Thus, Amount (A) to be paid = $5600 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 $4000, the simple interest in 1 year
= 10/100 × 4000
= 10 × 4000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $400 × 4 = $1600
Thus, Simple Interest (SI) = $1600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1600
= $5600
Thus, Amount to be paid = $5600 Answer
Similar Questions
(1) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 7% simple interest.
(2) Calculate the amount due if Linda borrowed a sum of $3350 at 7% simple interest for 3 years.
(3) Robert took a loan of $4200 at the rate of 8% simple interest per annum. If he paid an amount of $6552 to clear the loan, then find the time period of the loan.
(4) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6622 to clear the loan, then find the time period of the loan.
(5) What amount does David have to pay after 6 years if he takes a loan of $3400 at 2% simple interest?
(6) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $7392 to clear the loan, then find the time period of the loan.
(7) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 9% simple interest?
(8) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $10450 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 5% simple interest?
(10) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 2% simple interest.