Question:
What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 3% simple interest?
Correct Answer
$4370
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 3% × 5
= $3800 ×3/100 × 5
= 3800 × 3 × 5/100
= 11400 × 5/100
= 57000/100
= $570
Thus, Simple Interest = $570
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 = $3800 + $570
= $4370
Thus, Amount to be paid = $4370 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 = $3800
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $3800 + ($3800 × 3% × 5)
= $3800 + ($3800 ×3/100 × 5)
= $3800 + (3800 × 3 × 5/100)
= $3800 + (11400 × 5/100)
= $3800 + (57000/100)
= $3800 + $570 = $4370
Thus, Amount (A) to be paid = $4370 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 $3800, the simple interest in 1 year
= 3/100 × 3800
= 3 × 3800/100
= 11400/100 = $114
Thus, simple interest for 1 year = $114
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $114 × 5 = $570
Thus, Simple Interest (SI) = $570
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $570
= $4370
Thus, Amount to be paid = $4370 Answer
Similar Questions
(1) If Elizabeth paid $4140 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8337.5 to clear it?
(3) Patricia took a loan of $4300 at the rate of 9% simple interest per annum. If he paid an amount of $7396 to clear the loan, then find the time period of the loan.
(4) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.
(5) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) Betty had to pay $4505 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(8) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 2% simple interest?
(9) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 5% simple interest?
(10) Margaret had to pay $5002.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.