Question:
What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 2% simple interest?
Correct Answer
$4180
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 2% × 5
= $3800 ×2/100 × 5
= 3800 × 2 × 5/100
= 7600 × 5/100
= 38000/100
= $380
Thus, Simple Interest = $380
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 = $3800 + $380
= $4180
Thus, Amount to be paid = $4180 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 = $3800
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3800 + ($3800 × 2% × 5)
= $3800 + ($3800 ×2/100 × 5)
= $3800 + (3800 × 2 × 5/100)
= $3800 + (7600 × 5/100)
= $3800 + (38000/100)
= $3800 + $380 = $4180
Thus, Amount (A) to be paid = $4180 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 $3800, the simple interest in 1 year
= 2/100 × 3800
= 2 × 3800/100
= 7600/100 = $76
Thus, simple interest for 1 year = $76
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $76 × 5 = $380
Thus, Simple Interest (SI) = $380
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $380
= $4180
Thus, Amount to be paid = $4180 Answer
Similar Questions
(1) Nancy took a loan of $6300 at the rate of 8% simple interest per annum. If he paid an amount of $11340 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 9% simple interest.
(3) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 10% simple interest?
(4) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 9% simple interest.
(5) What amount does John have to pay after 6 years if he takes a loan of $3200 at 2% simple interest?
(6) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 10% simple interest.
(7) Calculate the amount due if Sarah borrowed a sum of $3850 at 3% simple interest for 4 years.
(8) If Jessica paid $4500 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) Karen took a loan of $5900 at the rate of 6% simple interest per annum. If he paid an amount of $8024 to clear the loan, then find the time period of the loan.
(10) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $10626 to clear the loan, then find the time period of the loan.