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) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 6% simple interest.
(2) Sandra had to pay $4850.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(3) Find the amount to be paid if Christopher borrowed a sum of $6000 at 3% simple interest for 7 years.
(4) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(5) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 5% simple interest?
(6) Sandra took a loan of $6900 at the rate of 8% simple interest per annum. If he paid an amount of $10764 to clear the loan, then find the time period of the loan.
(7) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7310 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Karen borrowed a sum of $5950 at 4% simple interest for 8 years.
(9) Anthony took a loan of $6600 at the rate of 10% simple interest per annum. If he paid an amount of $11880 to clear the loan, then find the time period of the loan.
(10) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $6160 to clear the loan, then find the time period of the loan.