Question:
What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 7% simple interest?
Correct Answer
$4117.5
Solution And Explanation
Solution
Given,
Principal (P) = $3050
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) = $3050 × 7% × 5
= $3050 ×7/100 × 5
= 3050 × 7 × 5/100
= 21350 × 5/100
= 106750/100
= $1067.5
Thus, Simple Interest = $1067.5
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 = $3050 + $1067.5
= $4117.5
Thus, Amount to be paid = $4117.5 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 = $3050
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3050 + ($3050 × 7% × 5)
= $3050 + ($3050 ×7/100 × 5)
= $3050 + (3050 × 7 × 5/100)
= $3050 + (21350 × 5/100)
= $3050 + (106750/100)
= $3050 + $1067.5 = $4117.5
Thus, Amount (A) to be paid = $4117.5 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 $3050, the simple interest in 1 year
= 7/100 × 3050
= 7 × 3050/100
= 21350/100 = $213.5
Thus, simple interest for 1 year = $213.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $213.5 × 5 = $1067.5
Thus, Simple Interest (SI) = $1067.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3050 + $1067.5
= $4117.5
Thus, Amount to be paid = $4117.5 Answer
Similar Questions
(1) What amount does James have to pay after 5 years if he takes a loan of $3000 at 8% simple interest?
(2) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9454 to clear the loan, then find the time period of the loan.
(3) If Kimberly paid $5580 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Calculate the amount due if Jennifer borrowed a sum of $3250 at 4% simple interest for 3 years.
(5) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $9600 to clear the loan, then find the time period of the loan.
(6) If William paid $4060 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(7) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 9% simple interest.
(8) Donald took a loan of $7000 at the rate of 7% simple interest per annum. If he paid an amount of $11900 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 8% simple interest.
(10) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8094 to clear the loan, then find the time period of the loan.