Question:
What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 5% simple interest?
Correct Answer
$4500
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 5% × 5
= $3600 ×5/100 × 5
= 3600 × 5 × 5/100
= 18000 × 5/100
= 90000/100
= $900
Thus, Simple Interest = $900
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 = $3600 + $900
= $4500
Thus, Amount to be paid = $4500 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 = $3600
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3600 + ($3600 × 5% × 5)
= $3600 + ($3600 ×5/100 × 5)
= $3600 + (3600 × 5 × 5/100)
= $3600 + (18000 × 5/100)
= $3600 + (90000/100)
= $3600 + $900 = $4500
Thus, Amount (A) to be paid = $4500 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 $3600, the simple interest in 1 year
= 5/100 × 3600
= 5 × 3600/100
= 18000/100 = $180
Thus, simple interest for 1 year = $180
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $180 × 5 = $900
Thus, Simple Interest (SI) = $900
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $900
= $4500
Thus, Amount to be paid = $4500 Answer
Similar Questions
(1) Find the amount to be paid if Charles borrowed a sum of $5900 at 7% simple interest for 7 years.
(2) Find the amount to be paid if Christopher borrowed a sum of $6000 at 4% simple interest for 7 years.
(3) How much loan did Carol borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8107.5 to clear it?
(4) If Patricia paid $3402 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(5) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $9230 to clear the loan, then find the time period of the loan.
(6) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(7) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $8732 to clear the loan, then find the time period of the loan.
(8) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $6816 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Linda borrowed a sum of $3350 at 5% simple interest for 4 years.
(10) How much loan did Andrew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7480 to clear it?