Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 4% simple interest?
Correct Answer
$4740
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 4% × 5
= $3950 ×4/100 × 5
= 3950 × 4 × 5/100
= 15800 × 5/100
= 79000/100
= $790
Thus, Simple Interest = $790
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 = $3950 + $790
= $4740
Thus, Amount to be paid = $4740 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 = $3950
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 4% × 5)
= $3950 + ($3950 ×4/100 × 5)
= $3950 + (3950 × 4 × 5/100)
= $3950 + (15800 × 5/100)
= $3950 + (79000/100)
= $3950 + $790 = $4740
Thus, Amount (A) to be paid = $4740 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 $3950, the simple interest in 1 year
= 4/100 × 3950
= 4 × 3950/100
= 15800/100 = $158
Thus, simple interest for 1 year = $158
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $158 × 5 = $790
Thus, Simple Interest (SI) = $790
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $790
= $4740
Thus, Amount to be paid = $4740 Answer
Similar Questions
(1) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 10% simple interest?
(2) How much loan did Donna borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8220 to clear it?
(3) Find the amount to be paid if David borrowed a sum of $5400 at 7% simple interest for 7 years.
(4) 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.
(5) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6540 to clear it?
(6) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $6970 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 10% simple interest.
(8) In how much time a principal of $3000 will amount to $3180 at a simple interest of 2% per annum?
(9) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $9240 to clear the loan, then find the time period of the loan.
(10) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $11247 to clear the loan, then find the time period of the loan.