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) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(2) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 6% simple interest?
(3) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 10% simple interest?
(4) Calculate the amount due if Jessica borrowed a sum of $3750 at 7% simple interest for 3 years.
(5) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 3 years.
(6) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $9128 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 4% simple interest.
(8) 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.
(9) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7668 to clear the loan, then find the time period of the loan.
(10) In how much time a principal of $3200 will amount to $3840 at a simple interest of 4% per annum?