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) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 5% simple interest.
(3) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $10780 to clear the loan, then find the time period of the loan.
(4) Barbara had to pay $4082.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $9860 to clear the loan, then find the time period of the loan.
(6) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6708 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if Robert borrowed a sum of $5100 at 10% simple interest for 7 years.
(8) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7668 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 2% simple interest.
(10) Richard took a loan of $5200 at the rate of 9% simple interest per annum. If he paid an amount of $8008 to clear the loan, then find the time period of the loan.