Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 5% simple interest?
Correct Answer
$4375
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 5% × 5
= $3500 ×5/100 × 5
= 3500 × 5 × 5/100
= 17500 × 5/100
= 87500/100
= $875
Thus, Simple Interest = $875
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 = $3500 + $875
= $4375
Thus, Amount to be paid = $4375 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 = $3500
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 5% × 5)
= $3500 + ($3500 ×5/100 × 5)
= $3500 + (3500 × 5 × 5/100)
= $3500 + (17500 × 5/100)
= $3500 + (87500/100)
= $3500 + $875 = $4375
Thus, Amount (A) to be paid = $4375 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 $3500, the simple interest in 1 year
= 5/100 × 3500
= 5 × 3500/100
= 17500/100 = $175
Thus, simple interest for 1 year = $175
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $175 × 5 = $875
Thus, Simple Interest (SI) = $875
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $875
= $4375
Thus, Amount to be paid = $4375 Answer
Similar Questions
(1) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6880 to clear the loan, then find the time period of the loan.
(2) Margaret had to pay $4872 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(3) If Elizabeth paid $3726 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 5% simple interest for 7 years.
(5) What amount will be due after 2 years if James borrowed a sum of $3000 at a 5% simple interest?
(6) What amount does John have to pay after 5 years if he takes a loan of $3200 at 5% simple interest?
(7) If Christopher paid $4640 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 8% simple interest.
(9) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 5% simple interest?
(10) In how much time a principal of $3000 will amount to $3240 at a simple interest of 4% per annum?