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 after 10 years if James borrowed a sum of $5000 at a rate of 10% simple interest.
(2) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 9% simple interest?
(3) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 9% simple interest?
(4) How much loan did Emily borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8100 to clear it?
(5) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $8965 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Robert borrowed a sum of $3100 at 10% simple interest for 4 years.
(7) Jessica took a loan of $5500 at the rate of 6% simple interest per annum. If he paid an amount of $8800 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Mary borrowed a sum of $5050 at 2% simple interest for 7 years.
(9) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8424 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Jennifer borrowed a sum of $3250 at 10% simple interest for 3 years.