Question:
What amount does David have to pay after 5 years if he takes a loan of $3400 at 2% simple interest?
Correct Answer
$3740
Solution And Explanation
Solution
Given,
Principal (P) = $3400
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) = $3400 × 2% × 5
= $3400 ×2/100 × 5
= 3400 × 2 × 5/100
= 6800 × 5/100
= 34000/100
= $340
Thus, Simple Interest = $340
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 = $3400 + $340
= $3740
Thus, Amount to be paid = $3740 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 = $3400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3400 + ($3400 × 2% × 5)
= $3400 + ($3400 ×2/100 × 5)
= $3400 + (3400 × 2 × 5/100)
= $3400 + (6800 × 5/100)
= $3400 + (34000/100)
= $3400 + $340 = $3740
Thus, Amount (A) to be paid = $3740 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 $3400, the simple interest in 1 year
= 2/100 × 3400
= 2 × 3400/100
= 6800/100 = $68
Thus, simple interest for 1 year = $68
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $68 × 5 = $340
Thus, Simple Interest (SI) = $340
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $340
= $3740
Thus, Amount to be paid = $3740 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 3% simple interest?
(2) What amount does David have to pay after 5 years if he takes a loan of $3400 at 4% simple interest?
(3) Lisa took a loan of $6100 at the rate of 8% simple interest per annum. If he paid an amount of $10980 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Jessica borrowed a sum of $3750 at 3% simple interest for 3 years.
(5) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $8460 to clear the loan, then find the time period of the loan.
(6) How much loan did Edward borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8740 to clear it?
(7) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12308 to clear the loan, then find the time period of the loan.
(8) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $6816 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 9% simple interest?
(10) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 6% simple interest?