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) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $9472 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 5% per annum, if he paid $7812.5 to clear it?
(3) In how much time a principal of $3200 will amount to $3392 at a simple interest of 3% per annum?
(4) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $7238 to clear the loan, then find the time period of the loan.
(5) What amount does David have to pay after 5 years if he takes a loan of $3400 at 5% simple interest?
(6) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 3% simple interest?
(7) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7100 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if Christopher borrowed a sum of $4000 at 2% simple interest for 3 years.
(9) If James paid $3600 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) If Andrew paid $5568 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.