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) Find the amount to be paid if Thomas borrowed a sum of $5800 at 6% simple interest for 7 years.
(2) Find the amount to be paid if Patricia borrowed a sum of $5150 at 8% simple interest for 8 years.
(3) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8682.5 to clear it?
(4) Lisa had to pay $4414.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 8% simple interest?
(6) Calculate the amount due if James borrowed a sum of $3000 at 10% simple interest for 3 years.
(7) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 7% simple interest?
(8) Find the amount to be paid if James borrowed a sum of $5000 at 7% simple interest for 7 years.
(9) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 2% simple interest?
(10) If Jennifer paid $3640 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.