Question:
What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 2% simple interest?
Correct Answer
$3795
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 2% × 5
= $3450 ×2/100 × 5
= 3450 × 2 × 5/100
= 6900 × 5/100
= 34500/100
= $345
Thus, Simple Interest = $345
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 = $3450 + $345
= $3795
Thus, Amount to be paid = $3795 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 = $3450
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3450 + ($3450 × 2% × 5)
= $3450 + ($3450 ×2/100 × 5)
= $3450 + (3450 × 2 × 5/100)
= $3450 + (6900 × 5/100)
= $3450 + (34500/100)
= $3450 + $345 = $3795
Thus, Amount (A) to be paid = $3795 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 $3450, the simple interest in 1 year
= 2/100 × 3450
= 2 × 3450/100
= 6900/100 = $69
Thus, simple interest for 1 year = $69
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $69 × 5 = $345
Thus, Simple Interest (SI) = $345
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $345
= $3795
Thus, Amount to be paid = $3795 Answer
Similar Questions
(1) Anthony had to pay $4816 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Daniel took a loan of $6200 at the rate of 10% simple interest per annum. If he paid an amount of $11780 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 5% simple interest.
(4) What amount does John have to pay after 5 years if he takes a loan of $3200 at 10% simple interest?
(5) Elizabeth took a loan of $4900 at the rate of 7% simple interest per annum. If he paid an amount of $6958 to clear the loan, then find the time period of the loan.
(6) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 10% simple interest?
(7) How much loan did William borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6050 to clear it?
(8) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 10% simple interest?
(9) Find the amount to be paid if Sarah borrowed a sum of $5850 at 5% simple interest for 8 years.
(10) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 9% simple interest.