Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 3% simple interest?
Correct Answer
$4542.5
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 3% × 5
= $3950 ×3/100 × 5
= 3950 × 3 × 5/100
= 11850 × 5/100
= 59250/100
= $592.5
Thus, Simple Interest = $592.5
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 = $3950 + $592.5
= $4542.5
Thus, Amount to be paid = $4542.5 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 = $3950
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 3% × 5)
= $3950 + ($3950 ×3/100 × 5)
= $3950 + (3950 × 3 × 5/100)
= $3950 + (11850 × 5/100)
= $3950 + (59250/100)
= $3950 + $592.5 = $4542.5
Thus, Amount (A) to be paid = $4542.5 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 $3950, the simple interest in 1 year
= 3/100 × 3950
= 3 × 3950/100
= 11850/100 = $118.5
Thus, simple interest for 1 year = $118.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $118.5 × 5 = $592.5
Thus, Simple Interest (SI) = $592.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $592.5
= $4542.5
Thus, Amount to be paid = $4542.5 Answer
Similar Questions
(1) If Thomas borrowed $3800 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(2) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 2% simple interest?
(3) Calculate the amount due if James borrowed a sum of $3000 at 8% simple interest for 3 years.
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 7% simple interest for 7 years.
(5) Charles took a loan of $5800 at the rate of 8% simple interest per annum. If he paid an amount of $9048 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Christopher borrowed a sum of $4000 at 9% simple interest for 3 years.
(7) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 6% simple interest?
(8) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 6% simple interest?
(9) Find the amount to be paid if Susan borrowed a sum of $5650 at 3% simple interest for 8 years.
(10) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7040 to clear the loan, then find the time period of the loan.