Question:
What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 7% simple interest?
Correct Answer
$5130
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 7% × 5
= $3800 ×7/100 × 5
= 3800 × 7 × 5/100
= 26600 × 5/100
= 133000/100
= $1330
Thus, Simple Interest = $1330
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 = $3800 + $1330
= $5130
Thus, Amount to be paid = $5130 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 = $3800
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3800 + ($3800 × 7% × 5)
= $3800 + ($3800 ×7/100 × 5)
= $3800 + (3800 × 7 × 5/100)
= $3800 + (26600 × 5/100)
= $3800 + (133000/100)
= $3800 + $1330 = $5130
Thus, Amount (A) to be paid = $5130 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 $3800, the simple interest in 1 year
= 7/100 × 3800
= 7 × 3800/100
= 26600/100 = $266
Thus, simple interest for 1 year = $266
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $266 × 5 = $1330
Thus, Simple Interest (SI) = $1330
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $1330
= $5130
Thus, Amount to be paid = $5130 Answer
Similar Questions
(1) What amount does John have to pay after 5 years if he takes a loan of $3200 at 2% simple interest?
(2) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 5% simple interest.
(3) If Ashley paid $5460 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) What amount does David have to pay after 5 years if he takes a loan of $3400 at 5% simple interest?
(5) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $6880 to clear the loan, then find the time period of the loan.
(6) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $6854 to clear the loan, then find the time period of the loan.
(7) How much loan did Donald borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7150 to clear it?
(8) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 2% simple interest.
(9) How much loan did Steven borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7260 to clear it?
(10) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $12240 to clear the loan, then find the time period of the loan.