Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 2% simple interest?
Correct Answer
$3520
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 2% × 5
= $3200 ×2/100 × 5
= 3200 × 2 × 5/100
= 6400 × 5/100
= 32000/100
= $320
Thus, Simple Interest = $320
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 = $3200 + $320
= $3520
Thus, Amount to be paid = $3520 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 = $3200
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 2% × 5)
= $3200 + ($3200 ×2/100 × 5)
= $3200 + (3200 × 2 × 5/100)
= $3200 + (6400 × 5/100)
= $3200 + (32000/100)
= $3200 + $320 = $3520
Thus, Amount (A) to be paid = $3520 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 $3200, the simple interest in 1 year
= 2/100 × 3200
= 2 × 3200/100
= 6400/100 = $64
Thus, simple interest for 1 year = $64
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $64 × 5 = $320
Thus, Simple Interest (SI) = $320
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $320
= $3520
Thus, Amount to be paid = $3520 Answer
Similar Questions
(1) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 4 years.
(3) Michelle had to pay $5544 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 10% simple interest?
(5) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 8% simple interest.
(6) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 2% simple interest?
(7) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 9% simple interest for 8 years.
(8) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 8% simple interest?
(9) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $10720 to clear the loan, then find the time period of the loan.
(10) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 7% simple interest?