Question:
What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 5% simple interest?
Correct Answer
$4687.5
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 5% × 5
= $3750 ×5/100 × 5
= 3750 × 5 × 5/100
= 18750 × 5/100
= 93750/100
= $937.5
Thus, Simple Interest = $937.5
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 = $3750 + $937.5
= $4687.5
Thus, Amount to be paid = $4687.5 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 = $3750
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3750 + ($3750 × 5% × 5)
= $3750 + ($3750 ×5/100 × 5)
= $3750 + (3750 × 5 × 5/100)
= $3750 + (18750 × 5/100)
= $3750 + (93750/100)
= $3750 + $937.5 = $4687.5
Thus, Amount (A) to be paid = $4687.5 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 $3750, the simple interest in 1 year
= 5/100 × 3750
= 5 × 3750/100
= 18750/100 = $187.5
Thus, simple interest for 1 year = $187.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $187.5 × 5 = $937.5
Thus, Simple Interest (SI) = $937.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $937.5
= $4687.5
Thus, Amount to be paid = $4687.5 Answer
Similar Questions
(1) Calculate the amount due if Richard borrowed a sum of $3600 at 3% simple interest for 4 years.
(2) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 2% simple interest?
(3) In how much time a principal of $3150 will amount to $3402 at a simple interest of 4% per annum?
(4) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 8% simple interest.
(6) Find the amount to be paid if Michael borrowed a sum of $5300 at 2% simple interest for 7 years.
(7) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 2% simple interest for 8 years.
(8) Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 3 years.
(9) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7668 to clear the loan, then find the time period of the loan.
(10) How much loan did Charles borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7375 to clear it?