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) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(2) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $8162 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if William borrowed a sum of $3500 at 2% simple interest for 3 years.
(4) Joseph had to pay $4033 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) Charles took a loan of $5800 at the rate of 6% simple interest per annum. If he paid an amount of $9280 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if David borrowed a sum of $5400 at 3% simple interest for 8 years.
(7) Find the amount to be paid if Susan borrowed a sum of $5650 at 10% simple interest for 8 years.
(8) If Sarah paid $4466 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Calculate the amount due if Jessica borrowed a sum of $3750 at 4% simple interest for 4 years.
(10) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 3% simple interest?