Question:
What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 4% simple interest?
Correct Answer
$4560
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 4% × 5
= $3800 ×4/100 × 5
= 3800 × 4 × 5/100
= 15200 × 5/100
= 76000/100
= $760
Thus, Simple Interest = $760
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 = $3800 + $760
= $4560
Thus, Amount to be paid = $4560 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 = $3800
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3800 + ($3800 × 4% × 5)
= $3800 + ($3800 ×4/100 × 5)
= $3800 + (3800 × 4 × 5/100)
= $3800 + (15200 × 5/100)
= $3800 + (76000/100)
= $3800 + $760 = $4560
Thus, Amount (A) to be paid = $4560 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 $3800, the simple interest in 1 year
= 4/100 × 3800
= 4 × 3800/100
= 15200/100 = $152
Thus, simple interest for 1 year = $152
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $152 × 5 = $760
Thus, Simple Interest (SI) = $760
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $760
= $4560
Thus, Amount to be paid = $4560 Answer
Similar Questions
(1) Find the amount to be paid if Michael borrowed a sum of $5300 at 9% simple interest for 7 years.
(2) How much loan did John borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5720 to clear it?
(3) Calculate the amount due if James borrowed a sum of $3000 at 9% simple interest for 3 years.
(4) Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 4 years.
(5) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $9324 to clear the loan, then find the time period of the loan.
(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 after 9 years if Jessica borrowed a sum of $5750 at a rate of 3% simple interest.
(8) Find the amount to be paid if Linda borrowed a sum of $5350 at 5% simple interest for 8 years.
(9) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 9% simple interest?
(10) Jennifer had to pay $3640 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.