Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 4% simple interest?
Correct Answer
$3840
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 4% × 5
= $3200 ×4/100 × 5
= 3200 × 4 × 5/100
= 12800 × 5/100
= 64000/100
= $640
Thus, Simple Interest = $640
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 = $3200 + $640
= $3840
Thus, Amount to be paid = $3840 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 = $3200
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 4% × 5)
= $3200 + ($3200 ×4/100 × 5)
= $3200 + (3200 × 4 × 5/100)
= $3200 + (12800 × 5/100)
= $3200 + (64000/100)
= $3200 + $640 = $3840
Thus, Amount (A) to be paid = $3840 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 $3200, the simple interest in 1 year
= 4/100 × 3200
= 4 × 3200/100
= 12800/100 = $128
Thus, simple interest for 1 year = $128
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $128 × 5 = $640
Thus, Simple Interest (SI) = $640
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $640
= $3840
Thus, Amount to be paid = $3840 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 5% simple interest.
(2) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7980 to clear it?
(3) Find the amount to be paid if Sarah borrowed a sum of $5850 at 6% simple interest for 8 years.
(4) If Christopher borrowed $4000 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(5) Find the amount to be paid if Joseph borrowed a sum of $5700 at 7% simple interest for 8 years.
(6) Find the amount to be paid if Susan borrowed a sum of $5650 at 4% simple interest for 7 years.
(7) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 8% simple interest?
(8) Calculate the amount due if Charles borrowed a sum of $3900 at 6% simple interest for 4 years.
(9) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.
(10) Find the amount to be paid if Jessica borrowed a sum of $5750 at 8% simple interest for 8 years.