Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 6% simple interest?
Correct Answer
$5200
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 6% × 5
= $4000 ×6/100 × 5
= 4000 × 6 × 5/100
= 24000 × 5/100
= 120000/100
= $1200
Thus, Simple Interest = $1200
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 + $1200
= $5200
Thus, Amount to be paid = $5200 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) = 6%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 6% × 5)
= $4000 + ($4000 ×6/100 × 5)
= $4000 + (4000 × 6 × 5/100)
= $4000 + (24000 × 5/100)
= $4000 + (120000/100)
= $4000 + $1200 = $5200
Thus, Amount (A) to be paid = $5200 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 $4000, the simple interest in 1 year
= 6/100 × 4000
= 6 × 4000/100
= 24000/100 = $240
Thus, simple interest for 1 year = $240
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $240 × 5 = $1200
Thus, Simple Interest (SI) = $1200
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1200
= $5200
Thus, Amount to be paid = $5200 Answer
Similar Questions
(1) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9028 to clear the loan, then find the time period of the loan.
(2) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12308 to clear the loan, then find the time period of the loan.
(3) How much loan did Richard borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6160 to clear it?
(4) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 6% simple interest?
(5) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 7 years.
(6) If Daniel paid $4592 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 4% simple interest?
(8) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 9% simple interest?
(9) David had to pay $3808 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7009 to clear the loan, then find the time period of the loan.