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) Find the amount to be paid if Susan borrowed a sum of $5650 at 3% simple interest for 8 years.
(2) If Ashley paid $5460 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(3) If Steven paid $5152 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) If Christopher paid $4800 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 9% simple interest?
(6) What amount does John have to pay after 6 years if he takes a loan of $3200 at 4% simple interest?
(7) Calculate the amount due if Jennifer borrowed a sum of $3250 at 2% simple interest for 4 years.
(8) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8802 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Robert borrowed a sum of $3100 at 8% simple interest for 3 years.
(10) Robert took a loan of $4200 at the rate of 8% simple interest per annum. If he paid an amount of $6216 to clear the loan, then find the time period of the loan.