Question:
What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 6% simple interest?
Correct Answer
$4485
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 6% × 5
= $3450 ×6/100 × 5
= 3450 × 6 × 5/100
= 20700 × 5/100
= 103500/100
= $1035
Thus, Simple Interest = $1035
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 = $3450 + $1035
= $4485
Thus, Amount to be paid = $4485 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 = $3450
Rate of Simple Interest (SI) or (R) = 6%
And, Time (t) = 5 years
Thus, Amount (A)
= $3450 + ($3450 × 6% × 5)
= $3450 + ($3450 ×6/100 × 5)
= $3450 + (3450 × 6 × 5/100)
= $3450 + (20700 × 5/100)
= $3450 + (103500/100)
= $3450 + $1035 = $4485
Thus, Amount (A) to be paid = $4485 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 $3450, the simple interest in 1 year
= 6/100 × 3450
= 6 × 3450/100
= 20700/100 = $207
Thus, simple interest for 1 year = $207
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $207 × 5 = $1035
Thus, Simple Interest (SI) = $1035
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $1035
= $4485
Thus, Amount to be paid = $4485 Answer
Similar Questions
(1) Find the amount to be paid if James borrowed a sum of $5000 at 3% simple interest for 7 years.
(2) Find the amount to be paid if Charles borrowed a sum of $5900 at 2% simple interest for 7 years.
(3) Find the amount to be paid if Michael borrowed a sum of $5300 at 3% simple interest for 8 years.
(4) Paul had to pay $4982 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(5) William took a loan of $5000 at the rate of 10% simple interest per annum. If he paid an amount of $8500 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 6% simple interest.
(7) How much loan did Donald borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7475 to clear it?
(8) Calculate the amount due if Michael borrowed a sum of $3300 at 6% simple interest for 3 years.
(9) Calculate the amount due if Thomas borrowed a sum of $3800 at 2% simple interest for 3 years.
(10) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 5% simple interest?