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 Donald borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8125 to clear it?
(2) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(3) William took a loan of $5000 at the rate of 9% simple interest per annum. If he paid an amount of $9050 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 8 years.
(5) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 7 years.
(6) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 5% simple interest?
(7) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 9% simple interest?
(8) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $11084 to clear the loan, then find the time period of the loan.
(9) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $6532 to clear the loan, then find the time period of the loan.
(10) If Lisa paid $4698 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.