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) How much loan did Linda borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6687.5 to clear it?
(2) Find the amount to be paid if Barbara borrowed a sum of $5550 at 7% simple interest for 8 years.
(3) Calculate the amount due if Barbara borrowed a sum of $3550 at 3% simple interest for 3 years.
(4) In how much time a principal of $3150 will amount to $3276 at a simple interest of 2% per annum?
(5) Ashley had to pay $5096 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) If Barbara paid $4118 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(7) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $13300 to clear the loan, then find the time period of the loan.
(8) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 10% simple interest.
(10) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $9620 to clear the loan, then find the time period of the loan.