Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 4% simple interest?
Correct Answer
$4800
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 4% × 5
= $4000 ×4/100 × 5
= 4000 × 4 × 5/100
= 16000 × 5/100
= 80000/100
= $800
Thus, Simple Interest = $800
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 = $4000 + $800
= $4800
Thus, Amount to be paid = $4800 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 = $4000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 4% × 5)
= $4000 + ($4000 ×4/100 × 5)
= $4000 + (4000 × 4 × 5/100)
= $4000 + (16000 × 5/100)
= $4000 + (80000/100)
= $4000 + $800 = $4800
Thus, Amount (A) to be paid = $4800 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 $4000, the simple interest in 1 year
= 4/100 × 4000
= 4 × 4000/100
= 16000/100 = $160
Thus, simple interest for 1 year = $160
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $160 × 5 = $800
Thus, Simple Interest (SI) = $800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $800
= $4800
Thus, Amount to be paid = $4800 Answer
Similar Questions
(1) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $5848 to clear the loan, then find the time period of the loan.
(2) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(3) What amount will be due after 2 years if John borrowed a sum of $3100 at a 7% simple interest?
(4) What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 2% simple interest?
(5) How much loan did Linda borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6152.5 to clear it?
(6) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $6364 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 9% simple interest?
(8) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 6% simple interest?
(9) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(10) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $7020 to clear the loan, then find the time period of the loan.