Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 2% simple interest?
Correct Answer
$4400
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 2% × 5
= $4000 ×2/100 × 5
= 4000 × 2 × 5/100
= 8000 × 5/100
= 40000/100
= $400
Thus, Simple Interest = $400
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 = $4000 + $400
= $4400
Thus, Amount to be paid = $4400 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 = $4000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 2% × 5)
= $4000 + ($4000 ×2/100 × 5)
= $4000 + (4000 × 2 × 5/100)
= $4000 + (8000 × 5/100)
= $4000 + (40000/100)
= $4000 + $400 = $4400
Thus, Amount (A) to be paid = $4400 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 $4000, the simple interest in 1 year
= 2/100 × 4000
= 2 × 4000/100
= 8000/100 = $80
Thus, simple interest for 1 year = $80
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $80 × 5 = $400
Thus, Simple Interest (SI) = $400
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $400
= $4400
Thus, Amount to be paid = $4400 Answer
Similar Questions
(1) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 4% simple interest?
(2) Charles had to pay $4368 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(3) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $12489 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 8% simple interest.
(5) What amount will be due after 2 years if James borrowed a sum of $3000 at a 5% simple interest?
(6) 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.
(7) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(8) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $10318 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 6% simple interest.
(10) Sandra took a loan of $6900 at the rate of 6% simple interest per annum. If he paid an amount of $10626 to clear the loan, then find the time period of the loan.