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) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 7% simple interest.
(2) David had to pay $3604 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(3) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $10595 to clear the loan, then find the time period of the loan.
(4) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $7740 to clear the loan, then find the time period of the loan.
(5) What amount does John have to pay after 5 years if he takes a loan of $3200 at 10% simple interest?
(6) In how much time a principal of $3200 will amount to $3392 at a simple interest of 2% per annum?
(7) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 4% simple interest.
(8) If Ashley paid $4914 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Find the amount to be paid if Michael borrowed a sum of $5300 at 8% simple interest for 8 years.
(10) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 2% simple interest?