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 Barbara borrowed a sum of $5550 at a rate of 6% simple interest.
(2) If Karen paid $4582 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(3) Christopher took a loan of $6000 at the rate of 8% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 7% simple interest.
(5) Find the amount to be paid if Thomas borrowed a sum of $5800 at 7% simple interest for 7 years.
(6) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 7 years.
(7) What amount does David have to pay after 5 years if he takes a loan of $3400 at 9% simple interest?
(8) Richard took a loan of $5200 at the rate of 7% simple interest per annum. If he paid an amount of $7384 to clear the loan, then find the time period of the loan.
(9) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $10296 to clear the loan, then find the time period of the loan.
(10) What amount does William have to pay after 6 years if he takes a loan of $3500 at 8% simple interest?