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) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $11040 to clear the loan, then find the time period of the loan.
(2) If Susan paid $3942 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(3) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 10% simple interest.
(4) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $7200 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 9% simple interest.
(6) Calculate the amount due if Mary borrowed a sum of $3050 at 6% simple interest for 4 years.
(7) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 9% simple interest?
(8) Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 4 years.
(9) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 7% simple interest.
(10) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.