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) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $11600 to clear the loan, then find the time period of the loan.
(2) What amount does William have to pay after 6 years if he takes a loan of $3500 at 3% simple interest?
(3) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $9702 to clear the loan, then find the time period of the loan.
(4) How much loan did Sarah borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6435 to clear it?
(5) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 7% simple interest.
(6) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 8 years.
(7) Patricia took a loan of $4300 at the rate of 9% simple interest per annum. If he paid an amount of $6622 to clear the loan, then find the time period of the loan.
(8) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(9) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6106 to clear the loan, then find the time period of the loan.
(10) How much loan did Jacob borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $9200 to clear it?