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) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 6% simple interest?
(2) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 6% simple interest.
(3) If Donna paid $5626 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(4) How much loan did Donna borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8562.5 to clear it?
(5) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $6936 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Karen borrowed a sum of $5950 at 7% simple interest for 8 years.
(7) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8507 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if John borrowed a sum of $5200 at 8% simple interest for 8 years.
(9) How much loan did Ashley borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8187.5 to clear it?
(10) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $8313 to clear the loan, then find the time period of the loan.