Question:
What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 4% simple interest?
Correct Answer
$4320
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 4% × 5
= $3600 ×4/100 × 5
= 3600 × 4 × 5/100
= 14400 × 5/100
= 72000/100
= $720
Thus, Simple Interest = $720
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 = $3600 + $720
= $4320
Thus, Amount to be paid = $4320 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 = $3600
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3600 + ($3600 × 4% × 5)
= $3600 + ($3600 ×4/100 × 5)
= $3600 + (3600 × 4 × 5/100)
= $3600 + (14400 × 5/100)
= $3600 + (72000/100)
= $3600 + $720 = $4320
Thus, Amount (A) to be paid = $4320 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 $3600, the simple interest in 1 year
= 4/100 × 3600
= 4 × 3600/100
= 14400/100 = $144
Thus, simple interest for 1 year = $144
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $144 × 5 = $720
Thus, Simple Interest (SI) = $720
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $720
= $4320
Thus, Amount to be paid = $4320 Answer
Similar Questions
(1) In how much time a principal of $3200 will amount to $3488 at a simple interest of 3% per annum?
(2) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 2% simple interest.
(3) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 7% simple interest?
(4) Daniel took a loan of $6200 at the rate of 7% simple interest per annum. If he paid an amount of $9238 to clear the loan, then find the time period of the loan.
(5) In how much time a principal of $3000 will amount to $3450 at a simple interest of 5% per annum?
(6) How much loan did Margaret borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7620 to clear it?
(7) Calculate the amount due if Mary borrowed a sum of $3050 at 8% simple interest for 4 years.
(8) Calculate the amount due if William borrowed a sum of $3500 at 3% simple interest for 4 years.
(9) Find the amount to be paid if Richard borrowed a sum of $5600 at 2% simple interest for 7 years.
(10) In how much time a principal of $3050 will amount to $3355 at a simple interest of 2% per annum?