Question:
What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 4% simple interest?
Correct Answer
$4140
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 4% × 5
= $3450 ×4/100 × 5
= 3450 × 4 × 5/100
= 13800 × 5/100
= 69000/100
= $690
Thus, Simple Interest = $690
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 = $3450 + $690
= $4140
Thus, Amount to be paid = $4140 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 = $3450
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3450 + ($3450 × 4% × 5)
= $3450 + ($3450 ×4/100 × 5)
= $3450 + (3450 × 4 × 5/100)
= $3450 + (13800 × 5/100)
= $3450 + (69000/100)
= $3450 + $690 = $4140
Thus, Amount (A) to be paid = $4140 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 $3450, the simple interest in 1 year
= 4/100 × 3450
= 4 × 3450/100
= 13800/100 = $138
Thus, simple interest for 1 year = $138
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $138 × 5 = $690
Thus, Simple Interest (SI) = $690
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $690
= $4140
Thus, Amount to be paid = $4140 Answer
Similar Questions
(1) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Joseph borrowed a sum of $3700 at 7% simple interest for 4 years.
(3) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $9350 to clear the loan, then find the time period of the loan.
(4) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $6660 to clear the loan, then find the time period of the loan.
(5) How much loan did John borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5980 to clear it?
(6) Find the amount to be paid if Mary borrowed a sum of $5050 at 3% simple interest for 8 years.
(7) What amount does William have to pay after 5 years if he takes a loan of $3500 at 9% simple interest?
(8) Robert had to pay $3379 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) Richard took a loan of $5200 at the rate of 6% simple interest per annum. If he paid an amount of $8320 to clear the loan, then find the time period of the loan.
(10) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 8% simple interest?