Question:
What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 2% simple interest?
Correct Answer
$4125
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 2% × 5
= $3750 ×2/100 × 5
= 3750 × 2 × 5/100
= 7500 × 5/100
= 37500/100
= $375
Thus, Simple Interest = $375
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 = $3750 + $375
= $4125
Thus, Amount to be paid = $4125 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 = $3750
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3750 + ($3750 × 2% × 5)
= $3750 + ($3750 ×2/100 × 5)
= $3750 + (3750 × 2 × 5/100)
= $3750 + (7500 × 5/100)
= $3750 + (37500/100)
= $3750 + $375 = $4125
Thus, Amount (A) to be paid = $4125 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 $3750, the simple interest in 1 year
= 2/100 × 3750
= 2 × 3750/100
= 7500/100 = $75
Thus, simple interest for 1 year = $75
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $75 × 5 = $375
Thus, Simple Interest (SI) = $375
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $375
= $4125
Thus, Amount to be paid = $4125 Answer
Similar Questions
(1) Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 7 years.
(2) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.
(3) Paul had to pay $4982 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(4) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8424 to clear the loan, then find the time period of the loan.
(5) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 8% simple interest?
(6) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $12160 to clear the loan, then find the time period of the loan.
(7) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $9900 to clear the loan, then find the time period of the loan.
(8) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 7% simple interest?
(9) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 9% simple interest?
(10) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 5% simple interest.