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) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.
(2) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 7% simple interest?
(3) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 2% simple interest?
(4) Calculate the amount due if William borrowed a sum of $3500 at 6% simple interest for 4 years.
(5) David had to pay $3706 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 7% simple interest.
(7) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 9% simple interest?
(8) How much loan did Mary borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6312.5 to clear it?
(9) If Sandra paid $4806 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(10) Christopher took a loan of $6000 at the rate of 8% simple interest per annum. If he paid an amount of $10320 to clear the loan, then find the time period of the loan.