Question:
What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 2% simple interest?
Correct Answer
$3960
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 2% × 5
= $3600 ×2/100 × 5
= 3600 × 2 × 5/100
= 7200 × 5/100
= 36000/100
= $360
Thus, Simple Interest = $360
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 = $3600 + $360
= $3960
Thus, Amount to be paid = $3960 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 = $3600
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3600 + ($3600 × 2% × 5)
= $3600 + ($3600 ×2/100 × 5)
= $3600 + (3600 × 2 × 5/100)
= $3600 + (7200 × 5/100)
= $3600 + (36000/100)
= $3600 + $360 = $3960
Thus, Amount (A) to be paid = $3960 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 $3600, the simple interest in 1 year
= 2/100 × 3600
= 2 × 3600/100
= 7200/100 = $72
Thus, simple interest for 1 year = $72
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $72 × 5 = $360
Thus, Simple Interest (SI) = $360
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $360
= $3960
Thus, Amount to be paid = $3960 Answer
Similar Questions
(1) How much loan did Michelle borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7992.5 to clear it?
(2) Find the amount to be paid if Sarah borrowed a sum of $5850 at 7% simple interest for 7 years.
(3) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(4) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $8428 to clear the loan, then find the time period of the loan.
(5) If Susan borrowed $3650 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(6) Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 3 years.
(7) Thomas took a loan of $5600 at the rate of 6% simple interest per annum. If he paid an amount of $8624 to clear the loan, then find the time period of the loan.
(8) Charles took a loan of $5800 at the rate of 9% simple interest per annum. If he paid an amount of $9976 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 8% simple interest for 7 years.
(10) Find the amount to be paid if David borrowed a sum of $5400 at 6% simple interest for 7 years.