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) Find the amount to be paid if Karen borrowed a sum of $5950 at 9% simple interest for 7 years.
(2) Jessica had to pay $4200 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(3) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 10% simple interest for 8 years.
(4) Calculate the amount due if Karen borrowed a sum of $3950 at 9% simple interest for 4 years.
(5) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 4% simple interest.
(6) If Kenneth paid $5600 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 will be due after 2 years if Joshua borrowed a sum of $3950 at a 5% simple interest?
(8) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 4% simple interest?
(9) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 5% simple interest.
(10) How much loan did Matthew borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6820 to clear it?