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) Find the amount to be paid if Michael borrowed a sum of $5300 at 7% simple interest for 8 years.
(2) How much loan did Jason borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8470 to clear it?
(3) What amount does William have to pay after 5 years if he takes a loan of $3500 at 4% simple interest?
(4) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 9% simple interest.
(5) Sandra took a loan of $6900 at the rate of 6% simple interest per annum. If he paid an amount of $9384 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 4% simple interest.
(7) If Susan borrowed $3650 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(8) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 5% simple interest?
(9) Calculate the amount due if Charles borrowed a sum of $3900 at 7% simple interest for 3 years.
(10) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.