Question:
What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 4% simple interest?
Correct Answer
$3960
Solution And Explanation
Solution
Given,
Principal (P) = $3300
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) = $3300 × 4% × 5
= $3300 ×4/100 × 5
= 3300 × 4 × 5/100
= 13200 × 5/100
= 66000/100
= $660
Thus, Simple Interest = $660
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 = $3300 + $660
= $3960
Thus, Amount to be paid = $3960 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 = $3300
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3300 + ($3300 × 4% × 5)
= $3300 + ($3300 ×4/100 × 5)
= $3300 + (3300 × 4 × 5/100)
= $3300 + (13200 × 5/100)
= $3300 + (66000/100)
= $3300 + $660 = $3960
Thus, Amount (A) to be paid = $3960 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 $3300, the simple interest in 1 year
= 4/100 × 3300
= 4 × 3300/100
= 13200/100 = $132
Thus, simple interest for 1 year = $132
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $132 × 5 = $660
Thus, Simple Interest (SI) = $660
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3300 + $660
= $3960
Thus, Amount to be paid = $3960 Answer
Similar Questions
(1) Find the amount to be paid if James borrowed a sum of $5000 at 8% simple interest for 7 years.
(2) Find the amount to be paid if Joseph borrowed a sum of $5700 at 6% simple interest for 7 years.
(3) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 4% simple interest?
(4) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 7% simple interest?
(5) Steven had to pay $5152 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 2% simple interest.
(7) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 2% simple interest.
(8) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $6854 to clear the loan, then find the time period of the loan.
(9) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $8580 to clear the loan, then find the time period of the loan.
(10) How much loan did Timothy borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8140 to clear it?