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) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $13400 to clear the loan, then find the time period of the loan.
(2) How much loan did Ronald borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8250 to clear it?
(3) How much loan did Sandra borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7417.5 to clear it?
(4) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 3% simple interest.
(5) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 5% simple interest?
(6) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 4% simple interest?
(7) Linda took a loan of $4700 at the rate of 8% simple interest per annum. If he paid an amount of $7708 to clear the loan, then find the time period of the loan.
(8) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.
(9) William took a loan of $5000 at the rate of 9% simple interest per annum. If he paid an amount of $9050 to clear the loan, then find the time period of the loan.
(10) How much loan did Donna borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8562.5 to clear it?