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) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 10% simple interest?
(2) How much loan did Mark borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7360 to clear it?
(3) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(4) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $12240 to clear the loan, then find the time period of the loan.
(5) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5440 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Karen borrowed a sum of $5950 at 9% simple interest for 8 years.
(7) In how much time a principal of $3050 will amount to $3660 at a simple interest of 5% per annum?
(8) Calculate the amount due if Charles borrowed a sum of $3900 at 8% simple interest for 3 years.
(9) Richard took a loan of $5200 at the rate of 9% simple interest per annum. If he paid an amount of $8476 to clear the loan, then find the time period of the loan.
(10) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8802 to clear the loan, then find the time period of the loan.