Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 3% simple interest?
Correct Answer
$4600
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 3% × 5
= $4000 ×3/100 × 5
= 4000 × 3 × 5/100
= 12000 × 5/100
= 60000/100
= $600
Thus, Simple Interest = $600
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 = $4000 + $600
= $4600
Thus, Amount to be paid = $4600 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 = $4000
Rate of Simple Interest (SI) or (R) = 3%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 3% × 5)
= $4000 + ($4000 ×3/100 × 5)
= $4000 + (4000 × 3 × 5/100)
= $4000 + (12000 × 5/100)
= $4000 + (60000/100)
= $4000 + $600 = $4600
Thus, Amount (A) to be paid = $4600 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 $4000, the simple interest in 1 year
= 3/100 × 4000
= 3 × 4000/100
= 12000/100 = $120
Thus, simple interest for 1 year = $120
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $120 × 5 = $600
Thus, Simple Interest (SI) = $600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $600
= $4600
Thus, Amount to be paid = $4600 Answer
Similar Questions
(1) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 6% simple interest?
(2) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $7360 to clear the loan, then find the time period of the loan.
(3) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $7956 to clear the loan, then find the time period of the loan.
(4) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $9176 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Jennifer borrowed a sum of $3250 at 4% simple interest for 3 years.
(6) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 4% simple interest?
(7) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(8) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $5920 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(10) Find the amount to be paid if James borrowed a sum of $5000 at 5% simple interest for 8 years.