Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 3% simple interest?
Correct Answer
$3680
Solution And Explanation
Solution
Given,
Principal (P) = $3200
Rate of Simple Interest (SI) = 3%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 3% simple interest means, Rate of Simple Interest (SI) is 3% 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) = $3200 × 3% × 5
= $3200 ×3/100 × 5
= 3200 × 3 × 5/100
= 9600 × 5/100
= 48000/100
= $480
Thus, Simple Interest = $480
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 = $3200 + $480
= $3680
Thus, Amount to be paid = $3680 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 = $3200
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 3% × 5)
= $3200 + ($3200 ×3/100 × 5)
= $3200 + (3200 × 3 × 5/100)
= $3200 + (9600 × 5/100)
= $3200 + (48000/100)
= $3200 + $480 = $3680
Thus, Amount (A) to be paid = $3680 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 3%
This, means, $3 per $100 per year
∵ For $100, the simple interest for 1 year = $3
∴ For $1, the simple interest for 1 year = 3/100
∴ For $3200, the simple interest in 1 year
= 3/100 × 3200
= 3 × 3200/100
= 9600/100 = $96
Thus, simple interest for 1 year = $96
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $96 × 5 = $480
Thus, Simple Interest (SI) = $480
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $480
= $3680
Thus, Amount to be paid = $3680 Answer
Similar Questions
(1) How much loan did Mark borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7680 to clear it?
(2) John took a loan of $4400 at the rate of 9% simple interest per annum. If he paid an amount of $7172 to clear the loan, then find the time period of the loan.
(3) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 5% simple interest?
(4) Find the amount to be paid if Richard borrowed a sum of $5600 at 9% simple interest for 7 years.
(5) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(6) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(7) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $7242 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 3% simple interest.
(9) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 2% simple interest.
(10) Calculate the amount due if Linda borrowed a sum of $3350 at 9% simple interest for 3 years.