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) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 7% simple interest?
(2) In how much time a principal of $3150 will amount to $3465 at a simple interest of 5% per annum?
(3) How much loan did Christopher borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6600 to clear it?
(4) Find the amount to be paid if Jessica borrowed a sum of $5750 at 4% simple interest for 7 years.
(5) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $6512 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Charles borrowed a sum of $3900 at 8% simple interest for 4 years.
(7) Find the amount to be paid if Karen borrowed a sum of $5950 at 7% simple interest for 7 years.
(8) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $9672 to clear the loan, then find the time period of the loan.
(9) Jennifer had to pay $3542.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(10) Nancy took a loan of $6300 at the rate of 7% simple interest per annum. If he paid an amount of $9828 to clear the loan, then find the time period of the loan.