Question:
What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 7% simple interest?
Correct Answer
$4657.5
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 7% × 5
= $3450 ×7/100 × 5
= 3450 × 7 × 5/100
= 24150 × 5/100
= 120750/100
= $1207.5
Thus, Simple Interest = $1207.5
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 = $3450 + $1207.5
= $4657.5
Thus, Amount to be paid = $4657.5 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 = $3450
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3450 + ($3450 × 7% × 5)
= $3450 + ($3450 ×7/100 × 5)
= $3450 + (3450 × 7 × 5/100)
= $3450 + (24150 × 5/100)
= $3450 + (120750/100)
= $3450 + $1207.5 = $4657.5
Thus, Amount (A) to be paid = $4657.5 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 $3450, the simple interest in 1 year
= 7/100 × 3450
= 7 × 3450/100
= 24150/100 = $241.5
Thus, simple interest for 1 year = $241.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $241.5 × 5 = $1207.5
Thus, Simple Interest (SI) = $1207.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $1207.5
= $4657.5
Thus, Amount to be paid = $4657.5 Answer
Similar Questions
(1) Find the amount to be paid if John borrowed a sum of $5200 at 6% simple interest for 7 years.
(2) How much loan did Edward borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8360 to clear it?
(3) How much loan did Amanda borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7865 to clear it?
(4) Calculate the amount due if Linda borrowed a sum of $3350 at 4% simple interest for 4 years.
(5) In how much time a principal of $3050 will amount to $3507.5 at a simple interest of 5% per annum?
(6) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6106 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if James borrowed a sum of $3000 at 7% simple interest for 4 years.
(8) Andrew had to pay $5376 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(9) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 9% simple interest?
(10) In how much time a principal of $3200 will amount to $3456 at a simple interest of 2% per annum?