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) Michael took a loan of $4600 at the rate of 9% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.
(2) How much loan did Betty borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7187.5 to clear it?
(3) If Mark paid $5280 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $13800 to clear the loan, then find the time period of the loan.
(5) What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 4% simple interest?
(6) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $10720 to clear the loan, then find the time period of the loan.
(7) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 4% simple interest?
(8) Calculate the amount due if Karen borrowed a sum of $3950 at 7% simple interest for 4 years.
(9) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 6% simple interest.
(10) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 2% simple interest?