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) Sarah had to pay $4196.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) Calculate the amount due if Mary borrowed a sum of $3050 at 2% simple interest for 3 years.
(3) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 9% simple interest?
(4) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $11970 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Richard borrowed a sum of $3600 at 5% simple interest for 3 years.
(6) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Richard borrowed a sum of $3300 at a 6% simple interest?
(8) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 2% simple interest.
(9) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 3% simple interest?
(10) Find the amount to be paid if Christopher borrowed a sum of $6000 at 3% simple interest for 8 years.