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) Find the amount to be paid if Thomas borrowed a sum of $5800 at 8% simple interest for 8 years.
(2) Calculate the amount due if Karen borrowed a sum of $3950 at 3% simple interest for 3 years.
(3) Calculate the amount due if Barbara borrowed a sum of $3550 at 2% simple interest for 4 years.
(4) Calculate the amount due if Joseph borrowed a sum of $3700 at 9% simple interest for 4 years.
(5) In how much time a principal of $3000 will amount to $3240 at a simple interest of 2% per annum?
(6) How much loan did Thomas borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6960 to clear it?
(7) What amount will be due after 2 years if William borrowed a sum of $3250 at a 7% simple interest?
(8) Calculate the amount due after 10 years if Susan borrowed a sum of $5650 at a rate of 7% simple interest.
(9) If Margaret paid $5220 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 6% simple interest.