Question:
What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 7% simple interest?
Correct Answer
$4860
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 7% × 5
= $3600 ×7/100 × 5
= 3600 × 7 × 5/100
= 25200 × 5/100
= 126000/100
= $1260
Thus, Simple Interest = $1260
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 = $3600 + $1260
= $4860
Thus, Amount to be paid = $4860 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 = $3600
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3600 + ($3600 × 7% × 5)
= $3600 + ($3600 ×7/100 × 5)
= $3600 + (3600 × 7 × 5/100)
= $3600 + (25200 × 5/100)
= $3600 + (126000/100)
= $3600 + $1260 = $4860
Thus, Amount (A) to be paid = $4860 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 $3600, the simple interest in 1 year
= 7/100 × 3600
= 7 × 3600/100
= 25200/100 = $252
Thus, simple interest for 1 year = $252
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $252 × 5 = $1260
Thus, Simple Interest (SI) = $1260
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $1260
= $4860
Thus, Amount to be paid = $4860 Answer
Similar Questions
(1) Calculate the amount due if Susan borrowed a sum of $3650 at 9% simple interest for 3 years.
(2) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 10% simple interest?
(3) Linda had to pay $3752 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $8704 to clear the loan, then find the time period of the loan.
(5) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $5964 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Richard borrowed a sum of $3600 at 4% simple interest for 3 years.
(7) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $7360 to clear the loan, then find the time period of the loan.
(8) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7450 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 10% simple interest?
(10) Calculate the amount due if James borrowed a sum of $3000 at 4% simple interest for 3 years.