Question:
What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 4% simple interest?
Correct Answer
$3900
Solution And Explanation
Solution
Given,
Principal (P) = $3250
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) = $3250 × 4% × 5
= $3250 ×4/100 × 5
= 3250 × 4 × 5/100
= 13000 × 5/100
= 65000/100
= $650
Thus, Simple Interest = $650
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 = $3250 + $650
= $3900
Thus, Amount to be paid = $3900 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 = $3250
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3250 + ($3250 × 4% × 5)
= $3250 + ($3250 ×4/100 × 5)
= $3250 + (3250 × 4 × 5/100)
= $3250 + (13000 × 5/100)
= $3250 + (65000/100)
= $3250 + $650 = $3900
Thus, Amount (A) to be paid = $3900 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 $3250, the simple interest in 1 year
= 4/100 × 3250
= 4 × 3250/100
= 13000/100 = $130
Thus, simple interest for 1 year = $130
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $130 × 5 = $650
Thus, Simple Interest (SI) = $650
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3250 + $650
= $3900
Thus, Amount to be paid = $3900 Answer
Similar Questions
(1) Find the amount to be paid if Patricia borrowed a sum of $5150 at 2% simple interest for 8 years.
(2) How much loan did James borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5500 to clear it?
(3) Calculate the amount due if Susan borrowed a sum of $3650 at 6% simple interest for 4 years.
(4) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $10660 to clear the loan, then find the time period of the loan.
(5) If William paid $3780 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 10% simple interest?
(7) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 9% simple interest?
(8) Calculate the amount due if James borrowed a sum of $3000 at 2% simple interest for 3 years.
(9) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $7084 to clear the loan, then find the time period of the loan.
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 9% simple interest?