Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 2% simple interest?
Correct Answer
$4070
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 2% × 5
= $3700 ×2/100 × 5
= 3700 × 2 × 5/100
= 7400 × 5/100
= 37000/100
= $370
Thus, Simple Interest = $370
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 = $3700 + $370
= $4070
Thus, Amount to be paid = $4070 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 = $3700
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 2% × 5)
= $3700 + ($3700 ×2/100 × 5)
= $3700 + (3700 × 2 × 5/100)
= $3700 + (7400 × 5/100)
= $3700 + (37000/100)
= $3700 + $370 = $4070
Thus, Amount (A) to be paid = $4070 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 $3700, the simple interest in 1 year
= 2/100 × 3700
= 2 × 3700/100
= 7400/100 = $74
Thus, simple interest for 1 year = $74
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $74 × 5 = $370
Thus, Simple Interest (SI) = $370
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $370
= $4070
Thus, Amount to be paid = $4070 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 5% simple interest.
(2) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 4% simple interest?
(3) How much loan did Susan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6780 to clear it?
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 4% simple interest for 8 years.
(5) If Mary paid $3660 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 6% simple interest?
(7) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 3% simple interest.
(8) How much loan did Amanda borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8580 to clear it?
(9) What amount does James have to pay after 6 years if he takes a loan of $3000 at 2% simple interest?
(10) Sarah took a loan of $5700 at the rate of 6% simple interest per annum. If he paid an amount of $8778 to clear the loan, then find the time period of the loan.