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) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 4% simple interest?
(2) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9860 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 9% simple interest.
(4) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 6% simple interest?
(5) Elizabeth took a loan of $4900 at the rate of 7% simple interest per annum. If he paid an amount of $8330 to clear the loan, then find the time period of the loan.
(6) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 7% simple interest?
(7) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 9% simple interest.
(8) How much loan did Susan borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6497.5 to clear it?
(9) What amount does David have to pay after 5 years if he takes a loan of $3400 at 5% simple interest?
(10) Find the amount to be paid if Susan borrowed a sum of $5650 at 8% simple interest for 8 years.