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) Find the amount to be paid if Joseph borrowed a sum of $5700 at 7% simple interest for 7 years.
(2) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 8% simple interest.
(3) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(4) What amount will be due after 2 years if John borrowed a sum of $3100 at a 5% simple interest?
(5) If Thomas paid $4408 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Kimberly had to pay $5347.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(7) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 10% simple interest.
(8) Calculate the amount due if Barbara borrowed a sum of $3550 at 2% simple interest for 3 years.
(9) Sandra took a loan of $6900 at the rate of 8% simple interest per annum. If he paid an amount of $11868 to clear the loan, then find the time period of the loan.
(10) Jessica had to pay $4312.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.