Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 4% simple interest?
Correct Answer
$4200
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 4% × 5
= $3500 ×4/100 × 5
= 3500 × 4 × 5/100
= 14000 × 5/100
= 70000/100
= $700
Thus, Simple Interest = $700
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 = $3500 + $700
= $4200
Thus, Amount to be paid = $4200 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 = $3500
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 4% × 5)
= $3500 + ($3500 ×4/100 × 5)
= $3500 + (3500 × 4 × 5/100)
= $3500 + (14000 × 5/100)
= $3500 + (70000/100)
= $3500 + $700 = $4200
Thus, Amount (A) to be paid = $4200 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 $3500, the simple interest in 1 year
= 4/100 × 3500
= 4 × 3500/100
= 14000/100 = $140
Thus, simple interest for 1 year = $140
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $140 × 5 = $700
Thus, Simple Interest (SI) = $700
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $700
= $4200
Thus, Amount to be paid = $4200 Answer
Similar Questions
(1) Emily had to pay $5320 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) What amount will be due after 2 years if David borrowed a sum of $3200 at a 9% simple interest?
(3) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 8 years.
(4) Karen took a loan of $5900 at the rate of 9% simple interest per annum. If he paid an amount of $9617 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Karen borrowed a sum of $5950 at 2% simple interest for 8 years.
(6) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 8% simple interest for 3 years.
(7) What amount does James have to pay after 6 years if he takes a loan of $3000 at 4% simple interest?
(8) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $10168 to clear the loan, then find the time period of the loan.
(9) If Jennifer paid $3510 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(10) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $10240 to clear the loan, then find the time period of the loan.