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 10 years if Thomas borrowed a sum of $5800 at a rate of 10% simple interest.
(2) Calculate the amount due if Susan borrowed a sum of $3650 at 9% simple interest for 4 years.
(3) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 8% simple interest?
(4) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 9% simple interest.
(5) What amount will be due after 2 years if John borrowed a sum of $3100 at a 5% simple interest?
(6) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 5% simple interest?
(7) Charles had to pay $4134 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) Patricia took a loan of $4300 at the rate of 10% simple interest per annum. If he paid an amount of $7310 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Linda borrowed a sum of $5350 at 10% simple interest for 7 years.
(10) Elizabeth took a loan of $4900 at the rate of 6% simple interest per annum. If he paid an amount of $7252 to clear the loan, then find the time period of the loan.