Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 2% simple interest?
Correct Answer
$4345
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 2% × 5
= $3950 ×2/100 × 5
= 3950 × 2 × 5/100
= 7900 × 5/100
= 39500/100
= $395
Thus, Simple Interest = $395
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 = $3950 + $395
= $4345
Thus, Amount to be paid = $4345 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 = $3950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 2% × 5)
= $3950 + ($3950 ×2/100 × 5)
= $3950 + (3950 × 2 × 5/100)
= $3950 + (7900 × 5/100)
= $3950 + (39500/100)
= $3950 + $395 = $4345
Thus, Amount (A) to be paid = $4345 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 $3950, the simple interest in 1 year
= 2/100 × 3950
= 2 × 3950/100
= 7900/100 = $79
Thus, simple interest for 1 year = $79
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $79 × 5 = $395
Thus, Simple Interest (SI) = $395
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $395
= $4345
Thus, Amount to be paid = $4345 Answer
Similar Questions
(1) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6880 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 8 years.
(3) Find the amount to be paid if Michael borrowed a sum of $5300 at 10% simple interest for 7 years.
(4) David took a loan of $4800 at the rate of 8% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 10% simple interest.
(6) Find the amount to be paid if Sarah borrowed a sum of $5850 at 4% simple interest for 8 years.
(7) Calculate the amount due if Patricia borrowed a sum of $3150 at 4% simple interest for 4 years.
(8) Charles took a loan of $5800 at the rate of 8% simple interest per annum. If he paid an amount of $9512 to clear the loan, then find the time period of the loan.
(9) If Richard paid $4176 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(10) 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.