Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 6% simple interest?
Correct Answer
$5135
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 6% × 5
= $3950 ×6/100 × 5
= 3950 × 6 × 5/100
= 23700 × 5/100
= 118500/100
= $1185
Thus, Simple Interest = $1185
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 + $1185
= $5135
Thus, Amount to be paid = $5135 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) = 6%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 6% × 5)
= $3950 + ($3950 ×6/100 × 5)
= $3950 + (3950 × 6 × 5/100)
= $3950 + (23700 × 5/100)
= $3950 + (118500/100)
= $3950 + $1185 = $5135
Thus, Amount (A) to be paid = $5135 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 $3950, the simple interest in 1 year
= 6/100 × 3950
= 6 × 3950/100
= 23700/100 = $237
Thus, simple interest for 1 year = $237
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $237 × 5 = $1185
Thus, Simple Interest (SI) = $1185
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1185
= $5135
Thus, Amount to be paid = $5135 Answer
Similar Questions
(1) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 3 years.
(2) If Barbara paid $4260 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(3) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 7% simple interest.
(4) How much loan did John borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5720 to clear it?
(5) Find the amount to be paid if Barbara borrowed a sum of $5550 at 8% simple interest for 7 years.
(6) Find the amount to be paid if David borrowed a sum of $5400 at 4% simple interest for 7 years.
(7) Patricia had to pay $3433.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(8) If Linda borrowed $3350 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(9) Nancy took a loan of $6300 at the rate of 8% simple interest per annum. If he paid an amount of $10836 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 8% simple interest.