Question:
What amount does James have to pay after 5 years if he takes a loan of $3000 at 5% simple interest?
Correct Answer
$3750
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 5%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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) = $3000 × 5% × 5
= $3000 ×5/100 × 5
= 3000 × 5 × 5/100
= 15000 × 5/100
= 75000/100
= $750
Thus, Simple Interest = $750
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 = $3000 + $750
= $3750
Thus, Amount to be paid = $3750 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 = $3000
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3000 + ($3000 × 5% × 5)
= $3000 + ($3000 ×5/100 × 5)
= $3000 + (3000 × 5 × 5/100)
= $3000 + (15000 × 5/100)
= $3000 + (75000/100)
= $3000 + $750 = $3750
Thus, Amount (A) to be paid = $3750 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $3000, the simple interest in 1 year
= 5/100 × 3000
= 5 × 3000/100
= 15000/100 = $150
Thus, simple interest for 1 year = $150
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $150 × 5 = $750
Thus, Simple Interest (SI) = $750
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $750
= $3750
Thus, Amount to be paid = $3750 Answer
Similar Questions
(1) Find the amount to be paid if Susan borrowed a sum of $5650 at 2% simple interest for 8 years.
(2) Michael took a loan of $4600 at the rate of 8% simple interest per annum. If he paid an amount of $6808 to clear the loan, then find the time period of the loan.
(3) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 8% simple interest?
(4) Matthew took a loan of $6400 at the rate of 7% simple interest per annum. If he paid an amount of $9984 to clear the loan, then find the time period of the loan.
(5) Emily had to pay $5462.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(6) How much loan did Brian borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8640 to clear it?
(7) Calculate the amount due if John borrowed a sum of $3200 at 5% simple interest for 4 years.
(8) Find the amount to be paid if Mary borrowed a sum of $5050 at 4% simple interest for 8 years.
(9) Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 3 years.
(10) Calculate the amount due if James borrowed a sum of $3000 at 10% simple interest for 4 years.