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) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 4% simple interest.
(2) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $10320 to clear the loan, then find the time period of the loan.
(3) If Matthew paid $5040 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) How much loan did Christopher borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6600 to clear it?
(5) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 4% simple interest.
(6) In how much time a principal of $3200 will amount to $3680 at a simple interest of 3% per annum?
(7) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 10% simple interest?
(8) If Betty paid $4590 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Find the amount to be paid if John borrowed a sum of $5200 at 8% simple interest for 7 years.
(10) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 6% simple interest?