Question:
What amount does James have to pay after 5 years if he takes a loan of $3000 at 2% simple interest?
Correct Answer
$3300
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 2%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $3000 × 2% × 5
= $3000 ×2/100 × 5
= 3000 × 2 × 5/100
= 6000 × 5/100
= 30000/100
= $300
Thus, Simple Interest = $300
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 = $3000 + $300
= $3300
Thus, Amount to be paid = $3300 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 = $3000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3000 + ($3000 × 2% × 5)
= $3000 + ($3000 ×2/100 × 5)
= $3000 + (3000 × 2 × 5/100)
= $3000 + (6000 × 5/100)
= $3000 + (30000/100)
= $3000 + $300 = $3300
Thus, Amount (A) to be paid = $3300 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $3000, the simple interest in 1 year
= 2/100 × 3000
= 2 × 3000/100
= 6000/100 = $60
Thus, simple interest for 1 year = $60
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $60 × 5 = $300
Thus, Simple Interest (SI) = $300
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $300
= $3300
Thus, Amount to be paid = $3300 Answer
Similar Questions
(1) Joshua had to pay $5488 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Michael took a loan of $4600 at the rate of 8% simple interest per annum. If he paid an amount of $6808 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Patricia borrowed a sum of $3150 at 6% simple interest for 4 years.
(4) If Elizabeth paid $4140 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $9350 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Richard borrowed a sum of $5600 at 3% simple interest for 7 years.
(7) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 6% simple interest.
(8) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 8% simple interest?
(9) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5995 to clear it?
(10) Calculate the amount due if Christopher borrowed a sum of $4000 at 5% simple interest for 3 years.