Question:
What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 4% simple interest?
Correct Answer
$4620
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 4% × 5
= $3850 ×4/100 × 5
= 3850 × 4 × 5/100
= 15400 × 5/100
= 77000/100
= $770
Thus, Simple Interest = $770
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 = $3850 + $770
= $4620
Thus, Amount to be paid = $4620 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 = $3850
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3850 + ($3850 × 4% × 5)
= $3850 + ($3850 ×4/100 × 5)
= $3850 + (3850 × 4 × 5/100)
= $3850 + (15400 × 5/100)
= $3850 + (77000/100)
= $3850 + $770 = $4620
Thus, Amount (A) to be paid = $4620 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 $3850, the simple interest in 1 year
= 4/100 × 3850
= 4 × 3850/100
= 15400/100 = $154
Thus, simple interest for 1 year = $154
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $154 × 5 = $770
Thus, Simple Interest (SI) = $770
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $770
= $4620
Thus, Amount to be paid = $4620 Answer
Similar Questions
(1) Calculate the amount due if Sarah borrowed a sum of $3850 at 10% simple interest for 3 years.
(2) Sarah had to pay $4312 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(3) If Donna paid $5820 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Calculate the amount due if Michael borrowed a sum of $3300 at 2% simple interest for 4 years.
(5) Mary took a loan of $4100 at the rate of 8% simple interest per annum. If he paid an amount of $6724 to clear the loan, then find the time period of the loan.
(6) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 8% simple interest?
(7) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 7% simple interest?
(8) If James paid $3600 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) If David paid $3672 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(10) Paul had to pay $5123 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.