Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 7% simple interest?
Correct Answer
$4320
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 7% × 5
= $3200 ×7/100 × 5
= 3200 × 7 × 5/100
= 22400 × 5/100
= 112000/100
= $1120
Thus, Simple Interest = $1120
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 = $3200 + $1120
= $4320
Thus, Amount to be paid = $4320 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 = $3200
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 7% × 5)
= $3200 + ($3200 ×7/100 × 5)
= $3200 + (3200 × 7 × 5/100)
= $3200 + (22400 × 5/100)
= $3200 + (112000/100)
= $3200 + $1120 = $4320
Thus, Amount (A) to be paid = $4320 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 $3200, the simple interest in 1 year
= 7/100 × 3200
= 7 × 3200/100
= 22400/100 = $224
Thus, simple interest for 1 year = $224
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $224 × 5 = $1120
Thus, Simple Interest (SI) = $1120
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $1120
= $4320
Thus, Amount to be paid = $4320 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 2% simple interest.
(2) If John paid $3712 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(3) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 6% simple interest?
(4) Calculate the amount due if Susan borrowed a sum of $3650 at 4% simple interest for 4 years.
(5) What amount does John have to pay after 5 years if he takes a loan of $3200 at 2% simple interest?
(6) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $8428 to clear the loan, then find the time period of the loan.
(7) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(8) How much loan did Susan borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7062.5 to clear it?
(9) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 5% simple interest.
(10) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $11946 to clear the loan, then find the time period of the loan.