Question:
What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 2% simple interest?
Correct Answer
$4235
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 2% × 5
= $3850 ×2/100 × 5
= 3850 × 2 × 5/100
= 7700 × 5/100
= 38500/100
= $385
Thus, Simple Interest = $385
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 = $3850 + $385
= $4235
Thus, Amount to be paid = $4235 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 = $3850
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3850 + ($3850 × 2% × 5)
= $3850 + ($3850 ×2/100 × 5)
= $3850 + (3850 × 2 × 5/100)
= $3850 + (7700 × 5/100)
= $3850 + (38500/100)
= $3850 + $385 = $4235
Thus, Amount (A) to be paid = $4235 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 $3850, the simple interest in 1 year
= 2/100 × 3850
= 2 × 3850/100
= 7700/100 = $77
Thus, simple interest for 1 year = $77
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $77 × 5 = $385
Thus, Simple Interest (SI) = $385
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $385
= $4235
Thus, Amount to be paid = $4235 Answer
Similar Questions
(1) How much loan did Kevin borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8875 to clear it?
(2) Anthony took a loan of $6600 at the rate of 10% simple interest per annum. If he paid an amount of $13200 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Michael borrowed a sum of $5300 at 3% simple interest for 8 years.
(4) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 9% simple interest.
(5) How much loan did Timothy borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8880 to clear it?
(6) In how much time a principal of $3050 will amount to $3507.5 at a simple interest of 3% per annum?
(7) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 3 years.
(8) Calculate the amount due if David borrowed a sum of $3400 at 9% simple interest for 4 years.
(9) How much loan did Susan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6780 to clear it?
(10) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 8 years.