Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 5% simple interest?
Correct Answer
$4625
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 5% × 5
= $3700 ×5/100 × 5
= 3700 × 5 × 5/100
= 18500 × 5/100
= 92500/100
= $925
Thus, Simple Interest = $925
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 = $3700 + $925
= $4625
Thus, Amount to be paid = $4625 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 = $3700
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 5% × 5)
= $3700 + ($3700 ×5/100 × 5)
= $3700 + (3700 × 5 × 5/100)
= $3700 + (18500 × 5/100)
= $3700 + (92500/100)
= $3700 + $925 = $4625
Thus, Amount (A) to be paid = $4625 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 $3700, the simple interest in 1 year
= 5/100 × 3700
= 5 × 3700/100
= 18500/100 = $185
Thus, simple interest for 1 year = $185
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $185 × 5 = $925
Thus, Simple Interest (SI) = $925
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $925
= $4625
Thus, Amount to be paid = $4625 Answer
Similar Questions
(1) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7820 to clear the loan, then find the time period of the loan.
(2) If Thomas borrowed $3800 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $8869 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Joseph borrowed a sum of $5700 at 5% simple interest for 8 years.
(5) Anthony took a loan of $6600 at the rate of 10% simple interest per annum. If he paid an amount of $11880 to clear the loan, then find the time period of the loan.
(6) If Barbara borrowed $3550 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(7) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(8) Find the amount to be paid if Joseph borrowed a sum of $5700 at 9% simple interest for 7 years.
(9) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $7790 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Linda borrowed a sum of $5350 at 4% simple interest for 7 years.