Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 5% simple interest?
Correct Answer
$4000
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 5% × 5
= $3200 ×5/100 × 5
= 3200 × 5 × 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 = $3200 + $800
= $4000
Thus, Amount to be paid = $4000 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 = $3200
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 5% × 5)
= $3200 + ($3200 ×5/100 × 5)
= $3200 + (3200 × 5 × 5/100)
= $3200 + (16000 × 5/100)
= $3200 + (80000/100)
= $3200 + $800 = $4000
Thus, Amount (A) to be paid = $4000 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 $3200, the simple interest in 1 year
= 5/100 × 3200
= 5 × 3200/100
= 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 = $3200 + $800
= $4000
Thus, Amount to be paid = $4000 Answer
Similar Questions
(1) Sarah took a loan of $5700 at the rate of 8% simple interest per annum. If he paid an amount of $8436 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Sarah borrowed a sum of $3850 at 4% simple interest for 3 years.
(3) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $7650 to clear the loan, then find the time period of the loan.
(4) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $9593 to clear the loan, then find the time period of the loan.
(5) If Jennifer paid $3900 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(6) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 8% simple interest?
(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 10% simple interest?
(8) Mark took a loan of $6800 at the rate of 6% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(9) How much loan did Daniel borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6710 to clear it?
(10) Find the amount to be paid if Richard borrowed a sum of $5600 at 8% simple interest for 7 years.