Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 5% simple interest?
Correct Answer
$5000
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 5% × 5
= $4000 ×5/100 × 5
= 4000 × 5 × 5/100
= 20000 × 5/100
= 100000/100
= $1000
Thus, Simple Interest = $1000
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 = $4000 + $1000
= $5000
Thus, Amount to be paid = $5000 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 = $4000
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 5% × 5)
= $4000 + ($4000 ×5/100 × 5)
= $4000 + (4000 × 5 × 5/100)
= $4000 + (20000 × 5/100)
= $4000 + (100000/100)
= $4000 + $1000 = $5000
Thus, Amount (A) to be paid = $5000 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 $4000, the simple interest in 1 year
= 5/100 × 4000
= 5 × 4000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $200 × 5 = $1000
Thus, Simple Interest (SI) = $1000
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1000
= $5000
Thus, Amount to be paid = $5000 Answer
Similar Questions
(1) How much loan did Andrew borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8160 to clear it?
(2) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 3 years.
(3) Find the amount to be paid if Richard borrowed a sum of $5600 at 6% simple interest for 8 years.
(4) Find the amount to be paid if Christopher borrowed a sum of $6000 at 6% simple interest for 7 years.
(5) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $8580 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 9% simple interest?
(7) How much loan did Jessica borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6900 to clear it?
(8) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 6% simple interest?
(9) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $9768 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Sarah borrowed a sum of $3850 at 5% simple interest for 3 years.