Question:
What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 2% simple interest?
Correct Answer
$3685
Solution And Explanation
Solution
Given,
Principal (P) = $3350
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) = $3350 × 2% × 5
= $3350 ×2/100 × 5
= 3350 × 2 × 5/100
= 6700 × 5/100
= 33500/100
= $335
Thus, Simple Interest = $335
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 = $3350 + $335
= $3685
Thus, Amount to be paid = $3685 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 = $3350
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3350 + ($3350 × 2% × 5)
= $3350 + ($3350 ×2/100 × 5)
= $3350 + (3350 × 2 × 5/100)
= $3350 + (6700 × 5/100)
= $3350 + (33500/100)
= $3350 + $335 = $3685
Thus, Amount (A) to be paid = $3685 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 $3350, the simple interest in 1 year
= 2/100 × 3350
= 2 × 3350/100
= 6700/100 = $67
Thus, simple interest for 1 year = $67
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $67 × 5 = $335
Thus, Simple Interest (SI) = $335
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3350 + $335
= $3685
Thus, Amount to be paid = $3685 Answer
Similar Questions
(1) How much loan did Jacob borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $10000 to clear it?
(2) John took a loan of $4400 at the rate of 9% simple interest per annum. If he paid an amount of $7964 to clear the loan, then find the time period of the loan.
(3) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 5% simple interest?
(4) Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 3 years.
(5) What amount does David have to pay after 5 years if he takes a loan of $3400 at 8% simple interest?
(6) Calculate the amount due if Karen borrowed a sum of $3950 at 3% simple interest for 3 years.
(7) In how much time a principal of $3050 will amount to $3233 at a simple interest of 2% per annum?
(8) If Steven paid $5336 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $10764 to clear the loan, then find the time period of the loan.
(10) What amount does John have to pay after 5 years if he takes a loan of $3200 at 2% simple interest?