Question:
What amount does James have to pay after 5 years if he takes a loan of $3000 at 7% simple interest?
Correct Answer
$4050
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 7%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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) = $3000 × 7% × 5
= $3000 ×7/100 × 5
= 3000 × 7 × 5/100
= 21000 × 5/100
= 105000/100
= $1050
Thus, Simple Interest = $1050
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 = $3000 + $1050
= $4050
Thus, Amount to be paid = $4050 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 = $3000
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3000 + ($3000 × 7% × 5)
= $3000 + ($3000 ×7/100 × 5)
= $3000 + (3000 × 7 × 5/100)
= $3000 + (21000 × 5/100)
= $3000 + (105000/100)
= $3000 + $1050 = $4050
Thus, Amount (A) to be paid = $4050 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $3000, the simple interest in 1 year
= 7/100 × 3000
= 7 × 3000/100
= 21000/100 = $210
Thus, simple interest for 1 year = $210
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $210 × 5 = $1050
Thus, Simple Interest (SI) = $1050
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $1050
= $4050
Thus, Amount to be paid = $4050 Answer
Similar Questions
(1) 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?
(2) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 2% simple interest.
(3) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 6% simple interest?
(4) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $6956 to clear the loan, then find the time period of the loan.
(5) David took a loan of $4800 at the rate of 8% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Barbara borrowed a sum of $5550 at 8% simple interest for 8 years.
(7) If Karen paid $4740 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) How much loan did Christopher borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7200 to clear it?
(9) Anthony took a loan of $6600 at the rate of 6% simple interest per annum. If he paid an amount of $10560 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 6% simple interest.