Question:
What amount does David have to pay after 5 years if he takes a loan of $3400 at 4% simple interest?
Correct Answer
$4080
Solution And Explanation
Solution
Given,
Principal (P) = $3400
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) = $3400 × 4% × 5
= $3400 ×4/100 × 5
= 3400 × 4 × 5/100
= 13600 × 5/100
= 68000/100
= $680
Thus, Simple Interest = $680
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 = $3400 + $680
= $4080
Thus, Amount to be paid = $4080 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 = $3400
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3400 + ($3400 × 4% × 5)
= $3400 + ($3400 ×4/100 × 5)
= $3400 + (3400 × 4 × 5/100)
= $3400 + (13600 × 5/100)
= $3400 + (68000/100)
= $3400 + $680 = $4080
Thus, Amount (A) to be paid = $4080 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 $3400, the simple interest in 1 year
= 4/100 × 3400
= 4 × 3400/100
= 13600/100 = $136
Thus, simple interest for 1 year = $136
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $136 × 5 = $680
Thus, Simple Interest (SI) = $680
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $680
= $4080
Thus, Amount to be paid = $4080 Answer
Similar Questions
(1) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9360 to clear it?
(2) Calculate the amount due if Susan borrowed a sum of $3650 at 5% simple interest for 4 years.
(3) Calculate the amount due if James borrowed a sum of $3000 at 8% simple interest for 3 years.
(4) Find the amount to be paid if Robert borrowed a sum of $5100 at 3% simple interest for 8 years.
(5) If Sandra paid $5162 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Jessica had to pay $4200 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(7) How much loan did Laura borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8635 to clear it?
(8) Find the amount to be paid if Barbara borrowed a sum of $5550 at 8% simple interest for 8 years.
(9) Find the amount to be paid if Michael borrowed a sum of $5300 at 4% simple interest for 8 years.
(10) How much loan did Donald borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7475 to clear it?