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) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 4% simple interest for 7 years.
(2) What amount does David have to pay after 5 years if he takes a loan of $3400 at 10% simple interest?
(3) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 9% simple interest?
(4) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6660 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 9% simple interest for 8 years.
(6) Charles took a loan of $5800 at the rate of 6% simple interest per annum. If he paid an amount of $8584 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 10% simple interest?
(8) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 9% simple interest.
(9) If Sarah paid $4620 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) Paul had to pay $4982 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.