Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 7% simple interest?
Correct Answer
$4995
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 7% × 5
= $3700 ×7/100 × 5
= 3700 × 7 × 5/100
= 25900 × 5/100
= 129500/100
= $1295
Thus, Simple Interest = $1295
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 = $3700 + $1295
= $4995
Thus, Amount to be paid = $4995 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 = $3700
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 7% × 5)
= $3700 + ($3700 ×7/100 × 5)
= $3700 + (3700 × 7 × 5/100)
= $3700 + (25900 × 5/100)
= $3700 + (129500/100)
= $3700 + $1295 = $4995
Thus, Amount (A) to be paid = $4995 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 $3700, the simple interest in 1 year
= 7/100 × 3700
= 7 × 3700/100
= 25900/100 = $259
Thus, simple interest for 1 year = $259
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $259 × 5 = $1295
Thus, Simple Interest (SI) = $1295
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $1295
= $4995
Thus, Amount to be paid = $4995 Answer
Similar Questions
(1) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 4% simple interest for 8 years.
(2) What amount will be due after 2 years if James borrowed a sum of $3000 at a 6% simple interest?
(3) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $9240 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Sarah borrowed a sum of $3850 at 6% simple interest for 4 years.
(5) Calculate the amount due if Karen borrowed a sum of $3950 at 3% simple interest for 3 years.
(6) Emily had to pay $5320 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(7) Calculate the amount due if James borrowed a sum of $3000 at 9% simple interest for 4 years.
(8) Robert took a loan of $4200 at the rate of 9% simple interest per annum. If he paid an amount of $7980 to clear the loan, then find the time period of the loan.
(9) What amount will be due after 2 years if William borrowed a sum of $3250 at a 9% simple interest?
(10) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $10450 to clear the loan, then find the time period of the loan.