Question:
What amount does David have to pay after 5 years if he takes a loan of $3400 at 6% simple interest?
Correct Answer
$4420
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 6%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 6% simple interest means, Rate of Simple Interest (SI) is 6% 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) = $3400 × 6% × 5
= $3400 ×6/100 × 5
= 3400 × 6 × 5/100
= 20400 × 5/100
= 102000/100
= $1020
Thus, Simple Interest = $1020
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 = $3400 + $1020
= $4420
Thus, Amount to be paid = $4420 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 = $3400
Rate of Simple Interest (SI) or (R) = 6%
And, Time (t) = 5 years
Thus, Amount (A)
= $3400 + ($3400 × 6% × 5)
= $3400 + ($3400 ×6/100 × 5)
= $3400 + (3400 × 6 × 5/100)
= $3400 + (20400 × 5/100)
= $3400 + (102000/100)
= $3400 + $1020 = $4420
Thus, Amount (A) to be paid = $4420 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 6%
This, means, $6 per $100 per year
∵ For $100, the simple interest for 1 year = $6
∴ For $1, the simple interest for 1 year = 6/100
∴ For $3400, the simple interest in 1 year
= 6/100 × 3400
= 6 × 3400/100
= 20400/100 = $204
Thus, simple interest for 1 year = $204
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $204 × 5 = $1020
Thus, Simple Interest (SI) = $1020
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $1020
= $4420
Thus, Amount to be paid = $4420 Answer
Similar Questions
(1) If Karen borrowed $3950 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(2) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $9593 to clear the loan, then find the time period of the loan.
(3) If Joshua paid $5880 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) How much loan did Jason borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8470 to clear it?
(5) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 2% simple interest?
(6) Thomas took a loan of $5600 at the rate of 6% simple interest per annum. If he paid an amount of $8624 to clear the loan, then find the time period of the loan.
(7) In how much time a principal of $3050 will amount to $3507.5 at a simple interest of 3% per annum?
(8) Calculate the amount due if Jessica borrowed a sum of $3750 at 4% simple interest for 4 years.
(9) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 4 years.
(10) 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.