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) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 3% simple interest for 8 years.
(2) Paul had to pay $5123 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(3) Kenneth had to pay $5600 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 does Susan have to pay after 5 years if he takes a loan of $3650 at 7% simple interest?
(5) If Christopher borrowed $4000 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(6) If Lisa paid $4860 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) Calculate the amount due if Patricia borrowed a sum of $3150 at 5% simple interest for 3 years.
(8) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $10758 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Christopher borrowed a sum of $6000 at 5% simple interest for 7 years.
(10) Daniel took a loan of $6200 at the rate of 7% simple interest per annum. If he paid an amount of $10106 to clear the loan, then find the time period of the loan.