Question:
What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 7% simple interest?
Correct Answer
$5062.5
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 7% × 5
= $3750 ×7/100 × 5
= 3750 × 7 × 5/100
= 26250 × 5/100
= 131250/100
= $1312.5
Thus, Simple Interest = $1312.5
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 = $3750 + $1312.5
= $5062.5
Thus, Amount to be paid = $5062.5 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 = $3750
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3750 + ($3750 × 7% × 5)
= $3750 + ($3750 ×7/100 × 5)
= $3750 + (3750 × 7 × 5/100)
= $3750 + (26250 × 5/100)
= $3750 + (131250/100)
= $3750 + $1312.5 = $5062.5
Thus, Amount (A) to be paid = $5062.5 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 $3750, the simple interest in 1 year
= 7/100 × 3750
= 7 × 3750/100
= 26250/100 = $262.5
Thus, simple interest for 1 year = $262.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $262.5 × 5 = $1312.5
Thus, Simple Interest (SI) = $1312.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $1312.5
= $5062.5
Thus, Amount to be paid = $5062.5 Answer
Similar Questions
(1) Find the amount to be paid if John borrowed a sum of $5200 at 2% simple interest for 8 years.
(2) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7009 to clear the loan, then find the time period of the loan.
(3) How much loan did Anthony borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6930 to clear it?
(4) Calculate the amount due if Susan borrowed a sum of $3650 at 9% simple interest for 3 years.
(5) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $11765 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if David borrowed a sum of $3400 at 9% simple interest for 4 years.
(7) Find the amount to be paid if Sarah borrowed a sum of $5850 at 2% simple interest for 8 years.
(8) How much loan did Sharon borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9687.5 to clear it?
(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(10) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.