Question:
What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 7% simple interest?
Correct Answer
$4455
Solution And Explanation
Solution
Given,
Principal (P) = $3300
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) = $3300 × 7% × 5
= $3300 ×7/100 × 5
= 3300 × 7 × 5/100
= 23100 × 5/100
= 115500/100
= $1155
Thus, Simple Interest = $1155
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 = $3300 + $1155
= $4455
Thus, Amount to be paid = $4455 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 = $3300
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3300 + ($3300 × 7% × 5)
= $3300 + ($3300 ×7/100 × 5)
= $3300 + (3300 × 7 × 5/100)
= $3300 + (23100 × 5/100)
= $3300 + (115500/100)
= $3300 + $1155 = $4455
Thus, Amount (A) to be paid = $4455 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 $3300, the simple interest in 1 year
= 7/100 × 3300
= 7 × 3300/100
= 23100/100 = $231
Thus, simple interest for 1 year = $231
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $231 × 5 = $1155
Thus, Simple Interest (SI) = $1155
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3300 + $1155
= $4455
Thus, Amount to be paid = $4455 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 8% simple interest.
(2) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 3% simple interest.
(3) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $6392 to clear the loan, then find the time period of the loan.
(4) How much loan did Richard borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6160 to clear it?
(5) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(6) Anthony took a loan of $6600 at the rate of 10% simple interest per annum. If he paid an amount of $10560 to clear the loan, then find the time period of the loan.
(7) How much loan did Richard borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7000 to clear it?
(8) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7344 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Barbara borrowed a sum of $3550 at 6% simple interest for 3 years.
(10) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 6% simple interest.