Question:
What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 5% simple interest?
Correct Answer
$4125
Solution And Explanation
Solution
Given,
Principal (P) = $3300
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) = $3300 × 5% × 5
= $3300 ×5/100 × 5
= 3300 × 5 × 5/100
= 16500 × 5/100
= 82500/100
= $825
Thus, Simple Interest = $825
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 = $3300 + $825
= $4125
Thus, Amount to be paid = $4125 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 = $3300
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3300 + ($3300 × 5% × 5)
= $3300 + ($3300 ×5/100 × 5)
= $3300 + (3300 × 5 × 5/100)
= $3300 + (16500 × 5/100)
= $3300 + (82500/100)
= $3300 + $825 = $4125
Thus, Amount (A) to be paid = $4125 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 $3300, the simple interest in 1 year
= 5/100 × 3300
= 5 × 3300/100
= 16500/100 = $165
Thus, simple interest for 1 year = $165
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $165 × 5 = $825
Thus, Simple Interest (SI) = $825
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3300 + $825
= $4125
Thus, Amount to be paid = $4125 Answer
Similar Questions
(1) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $6674 to clear the loan, then find the time period of the loan.
(2) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 4% simple interest?
(3) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $8946 to clear the loan, then find the time period of the loan.
(4) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 8% simple interest?
(5) Find the amount to be paid if Robert borrowed a sum of $5100 at 8% simple interest for 8 years.
(6) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $8944 to clear the loan, then find the time period of the loan.
(7) How much loan did Donna borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7535 to clear it?
(8) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 8% simple interest.
(10) Jennifer took a loan of $4500 at the rate of 8% simple interest per annum. If he paid an amount of $8100 to clear the loan, then find the time period of the loan.