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) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $9760 to clear the loan, then find the time period of the loan.
(2) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 4% simple interest?
(3) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $10269 to clear the loan, then find the time period of the loan.
(4) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 5% simple interest?
(5) Thomas took a loan of $5600 at the rate of 10% simple interest per annum. If he paid an amount of $10640 to clear the loan, then find the time period of the loan.
(6) Elizabeth took a loan of $4900 at the rate of 6% simple interest per annum. If he paid an amount of $6958 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if William borrowed a sum of $3500 at 4% simple interest for 4 years.
(8) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 3% simple interest?
(9) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9880 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Mary borrowed a sum of $5050 at 4% simple interest for 8 years.