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) Calculate the amount due if Charles borrowed a sum of $3900 at 4% simple interest for 3 years.
(2) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 4% simple interest.
(3) Find the amount to be paid if Joseph borrowed a sum of $5700 at 3% simple interest for 8 years.
(4) If Sandra paid $5162 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(5) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 5% simple interest?
(6) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $10836 to clear the loan, then find the time period of the loan.
(7) Thomas took a loan of $5600 at the rate of 6% simple interest per annum. If he paid an amount of $7952 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.
(9) Find the amount to be paid if Richard borrowed a sum of $5600 at 3% simple interest for 7 years.
(10) John had to pay $3584 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.