Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 5% simple interest?
Correct Answer
$4937.5
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 5% × 5
= $3950 ×5/100 × 5
= 3950 × 5 × 5/100
= 19750 × 5/100
= 98750/100
= $987.5
Thus, Simple Interest = $987.5
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 = $3950 + $987.5
= $4937.5
Thus, Amount to be paid = $4937.5 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 = $3950
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 5% × 5)
= $3950 + ($3950 ×5/100 × 5)
= $3950 + (3950 × 5 × 5/100)
= $3950 + (19750 × 5/100)
= $3950 + (98750/100)
= $3950 + $987.5 = $4937.5
Thus, Amount (A) to be paid = $4937.5 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 $3950, the simple interest in 1 year
= 5/100 × 3950
= 5 × 3950/100
= 19750/100 = $197.5
Thus, simple interest for 1 year = $197.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $197.5 × 5 = $987.5
Thus, Simple Interest (SI) = $987.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $987.5
= $4937.5
Thus, Amount to be paid = $4937.5 Answer
Similar Questions
(1) What amount does William have to pay after 5 years if he takes a loan of $3500 at 8% simple interest?
(2) How much loan did Paul borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7705 to clear it?
(3) If Joshua paid $5488 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $9632 to clear the loan, then find the time period of the loan.
(5) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(6) Anthony took a loan of $6600 at the rate of 6% simple interest per annum. If he paid an amount of $8976 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if William borrowed a sum of $3500 at 8% simple interest for 4 years.
(8) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8094 to clear the loan, then find the time period of the loan.
(9) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 3% simple interest?
(10) Calculate the amount due if Michael borrowed a sum of $3300 at 4% simple interest for 4 years.