Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 2% simple interest?
Correct Answer
$3850
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 2% × 5
= $3500 ×2/100 × 5
= 3500 × 2 × 5/100
= 7000 × 5/100
= 35000/100
= $350
Thus, Simple Interest = $350
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 = $3500 + $350
= $3850
Thus, Amount to be paid = $3850 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 = $3500
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 2% × 5)
= $3500 + ($3500 ×2/100 × 5)
= $3500 + (3500 × 2 × 5/100)
= $3500 + (7000 × 5/100)
= $3500 + (35000/100)
= $3500 + $350 = $3850
Thus, Amount (A) to be paid = $3850 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 $3500, the simple interest in 1 year
= 2/100 × 3500
= 2 × 3500/100
= 7000/100 = $70
Thus, simple interest for 1 year = $70
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $70 × 5 = $350
Thus, Simple Interest (SI) = $350
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $350
= $3850
Thus, Amount to be paid = $3850 Answer
Similar Questions
(1) Find the amount to be paid if Barbara borrowed a sum of $5550 at 9% simple interest for 7 years.
(2) What amount will be due after 2 years if John borrowed a sum of $3100 at a 8% simple interest?
(3) John had to pay $3584 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) Patricia had to pay $3339 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(5) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $9798 to clear the loan, then find the time period of the loan.
(6) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(7) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6364 to clear the loan, then find the time period of the loan.
(8) What amount does William have to pay after 6 years if he takes a loan of $3500 at 4% simple interest?
(9) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6120 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Linda borrowed a sum of $5350 at 2% simple interest for 7 years.