Question:
What amount does James have to pay after 5 years if he takes a loan of $3000 at 4% simple interest?
Correct Answer
$3600
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 4%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $3000 × 4% × 5
= $3000 ×4/100 × 5
= 3000 × 4 × 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 = $3000 + $600
= $3600
Thus, Amount to be paid = $3600 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 = $3000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3000 + ($3000 × 4% × 5)
= $3000 + ($3000 ×4/100 × 5)
= $3000 + (3000 × 4 × 5/100)
= $3000 + (12000 × 5/100)
= $3000 + (60000/100)
= $3000 + $600 = $3600
Thus, Amount (A) to be paid = $3600 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $3000, the simple interest in 1 year
= 4/100 × 3000
= 4 × 3000/100
= 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 = $3000 + $600
= $3600
Thus, Amount to be paid = $3600 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 3% simple interest.
(2) Calculate the amount due if Thomas borrowed a sum of $3800 at 3% simple interest for 4 years.
(3) If Charles borrowed $3900 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) In how much time a principal of $3050 will amount to $3660 at a simple interest of 4% per annum?
(5) How much loan did Anthony borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7245 to clear it?
(6) In how much time a principal of $3150 will amount to $3528 at a simple interest of 3% per annum?
(7) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 6% simple interest?
(8) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 6% simple interest?
(9) Find the amount to be paid if James borrowed a sum of $5000 at 3% simple interest for 7 years.
(10) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9880 to clear the loan, then find the time period of the loan.