Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 7% simple interest?
Correct Answer
$4725
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 7% × 5
= $3500 ×7/100 × 5
= 3500 × 7 × 5/100
= 24500 × 5/100
= 122500/100
= $1225
Thus, Simple Interest = $1225
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 = $3500 + $1225
= $4725
Thus, Amount to be paid = $4725 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 = $3500
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 7% × 5)
= $3500 + ($3500 ×7/100 × 5)
= $3500 + (3500 × 7 × 5/100)
= $3500 + (24500 × 5/100)
= $3500 + (122500/100)
= $3500 + $1225 = $4725
Thus, Amount (A) to be paid = $4725 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 $3500, the simple interest in 1 year
= 7/100 × 3500
= 7 × 3500/100
= 24500/100 = $245
Thus, simple interest for 1 year = $245
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $245 × 5 = $1225
Thus, Simple Interest (SI) = $1225
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $1225
= $4725
Thus, Amount to be paid = $4725 Answer
Similar Questions
(1) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 2% simple interest.
(2) Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 3 years.
(3) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $11160 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Charles borrowed a sum of $3900 at 6% simple interest for 3 years.
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 9% simple interest for 3 years.
(6) Calculate the amount due if Sarah borrowed a sum of $3850 at 6% simple interest for 3 years.
(7) Susan took a loan of $5300 at the rate of 6% simple interest per annum. If he paid an amount of $7526 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 8% simple interest.
(9) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 10% simple interest.
(10) What amount will be due after 2 years if John borrowed a sum of $3100 at a 4% simple interest?