Question:
What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 2% simple interest?
Correct Answer
$4290
Solution And Explanation
Solution
Given,
Principal (P) = $3900
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) = $3900 × 2% × 5
= $3900 ×2/100 × 5
= 3900 × 2 × 5/100
= 7800 × 5/100
= 39000/100
= $390
Thus, Simple Interest = $390
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 = $3900 + $390
= $4290
Thus, Amount to be paid = $4290 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 = $3900
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3900 + ($3900 × 2% × 5)
= $3900 + ($3900 ×2/100 × 5)
= $3900 + (3900 × 2 × 5/100)
= $3900 + (7800 × 5/100)
= $3900 + (39000/100)
= $3900 + $390 = $4290
Thus, Amount (A) to be paid = $4290 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 $3900, the simple interest in 1 year
= 2/100 × 3900
= 2 × 3900/100
= 7800/100 = $78
Thus, simple interest for 1 year = $78
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $78 × 5 = $390
Thus, Simple Interest (SI) = $390
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3900 + $390
= $4290
Thus, Amount to be paid = $4290 Answer
Similar Questions
(1) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9750 to clear it?
(2) In how much time a principal of $3200 will amount to $3840 at a simple interest of 5% per annum?
(3) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 3% simple interest?
(4) Robert had to pay $3565 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 9% simple interest.
(6) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 3% simple interest.
(7) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $9128 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 10 years if Susan borrowed a sum of $5650 at a rate of 2% simple interest.
(9) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 10% simple interest.
(10) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.