Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 3% simple interest?
Correct Answer
$4025
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 3% × 5
= $3500 ×3/100 × 5
= 3500 × 3 × 5/100
= 10500 × 5/100
= 52500/100
= $525
Thus, Simple Interest = $525
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 = $3500 + $525
= $4025
Thus, Amount to be paid = $4025 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 = $3500
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 3% × 5)
= $3500 + ($3500 ×3/100 × 5)
= $3500 + (3500 × 3 × 5/100)
= $3500 + (10500 × 5/100)
= $3500 + (52500/100)
= $3500 + $525 = $4025
Thus, Amount (A) to be paid = $4025 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 $3500, the simple interest in 1 year
= 3/100 × 3500
= 3 × 3500/100
= 10500/100 = $105
Thus, simple interest for 1 year = $105
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $105 × 5 = $525
Thus, Simple Interest (SI) = $525
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $525
= $4025
Thus, Amount to be paid = $4025 Answer
Similar Questions
(1) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5680 to clear the loan, then find the time period of the loan.
(2) What amount does David have to pay after 5 years if he takes a loan of $3400 at 3% simple interest?
(3) Calculate the amount due if Charles borrowed a sum of $3900 at 5% simple interest for 3 years.
(4) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $13300 to clear the loan, then find the time period of the loan.
(5) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 6% simple interest?
(6) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 3 years.
(7) Find the amount to be paid if James borrowed a sum of $5000 at 3% simple interest for 8 years.
(8) Calculate the amount due if Thomas borrowed a sum of $3800 at 10% simple interest for 3 years.
(9) Find the amount to be paid if Robert borrowed a sum of $5100 at 10% simple interest for 7 years.
(10) David took a loan of $4800 at the rate of 6% simple interest per annum. If he paid an amount of $6528 to clear the loan, then find the time period of the loan.