Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 4% simple interest?
Correct Answer
$4440
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 4% × 5
= $3700 ×4/100 × 5
= 3700 × 4 × 5/100
= 14800 × 5/100
= 74000/100
= $740
Thus, Simple Interest = $740
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 = $3700 + $740
= $4440
Thus, Amount to be paid = $4440 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 = $3700
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 4% × 5)
= $3700 + ($3700 ×4/100 × 5)
= $3700 + (3700 × 4 × 5/100)
= $3700 + (14800 × 5/100)
= $3700 + (74000/100)
= $3700 + $740 = $4440
Thus, Amount (A) to be paid = $4440 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 $3700, the simple interest in 1 year
= 4/100 × 3700
= 4 × 3700/100
= 14800/100 = $148
Thus, simple interest for 1 year = $148
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $148 × 5 = $740
Thus, Simple Interest (SI) = $740
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $740
= $4440
Thus, Amount to be paid = $4440 Answer
Similar Questions
(1) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $8639 to clear the loan, then find the time period of the loan.
(2) How much loan did Susan borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6215 to clear it?
(3) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 8% simple interest?
(4) Donald had to pay $4905 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $10626 to clear the loan, then find the time period of the loan.
(6) William took a loan of $5000 at the rate of 9% simple interest per annum. If he paid an amount of $9500 to clear the loan, then find the time period of the loan.
(7) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 6% simple interest?
(8) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $7800 to clear the loan, then find the time period of the loan.
(9) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $11222 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if John borrowed a sum of $3200 at 2% simple interest for 3 years.