Question:
What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 7% simple interest?
Correct Answer
$4387.5
Solution And Explanation
Solution
Given,
Principal (P) = $3250
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) = $3250 × 7% × 5
= $3250 ×7/100 × 5
= 3250 × 7 × 5/100
= 22750 × 5/100
= 113750/100
= $1137.5
Thus, Simple Interest = $1137.5
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 = $3250 + $1137.5
= $4387.5
Thus, Amount to be paid = $4387.5 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 = $3250
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3250 + ($3250 × 7% × 5)
= $3250 + ($3250 ×7/100 × 5)
= $3250 + (3250 × 7 × 5/100)
= $3250 + (22750 × 5/100)
= $3250 + (113750/100)
= $3250 + $1137.5 = $4387.5
Thus, Amount (A) to be paid = $4387.5 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 $3250, the simple interest in 1 year
= 7/100 × 3250
= 7 × 3250/100
= 22750/100 = $227.5
Thus, simple interest for 1 year = $227.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $227.5 × 5 = $1137.5
Thus, Simple Interest (SI) = $1137.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3250 + $1137.5
= $4387.5
Thus, Amount to be paid = $4387.5 Answer
Similar Questions
(1) Calculate the amount due if Richard borrowed a sum of $3600 at 4% simple interest for 3 years.
(2) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 2% simple interest.
(3) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6800 to clear the loan, then find the time period of the loan.
(4) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $11560 to clear the loan, then find the time period of the loan.
(5) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $11970 to clear the loan, then find the time period of the loan.
(6) What amount does James have to pay after 5 years if he takes a loan of $3000 at 3% simple interest?
(7) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 9% simple interest.
(8) If Patricia paid $3780 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $6846 to clear the loan, then find the time period of the loan.
(10) In how much time a principal of $3050 will amount to $3233 at a simple interest of 3% per annum?