Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 3% simple interest?
Correct Answer
$4255
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 3% × 5
= $3700 ×3/100 × 5
= 3700 × 3 × 5/100
= 11100 × 5/100
= 55500/100
= $555
Thus, Simple Interest = $555
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 = $3700 + $555
= $4255
Thus, Amount to be paid = $4255 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 = $3700
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 3% × 5)
= $3700 + ($3700 ×3/100 × 5)
= $3700 + (3700 × 3 × 5/100)
= $3700 + (11100 × 5/100)
= $3700 + (55500/100)
= $3700 + $555 = $4255
Thus, Amount (A) to be paid = $4255 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 $3700, the simple interest in 1 year
= 3/100 × 3700
= 3 × 3700/100
= 11100/100 = $111
Thus, simple interest for 1 year = $111
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $111 × 5 = $555
Thus, Simple Interest (SI) = $555
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $555
= $4255
Thus, Amount to be paid = $4255 Answer
Similar Questions
(1) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 10% simple interest?
(2) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(3) 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.
(4) If Steven paid $5336 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(5) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 3% simple interest.
(6) Susan took a loan of $5300 at the rate of 7% simple interest per annum. If he paid an amount of $7526 to clear the loan, then find the time period of the loan.
(7) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $8642 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Patricia borrowed a sum of $5150 at 7% simple interest for 8 years.
(9) Daniel took a loan of $6200 at the rate of 10% simple interest per annum. If he paid an amount of $12400 to clear the loan, then find the time period of the loan.
(10) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 3% simple interest?