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) Calculate the amount due if Patricia borrowed a sum of $3150 at 5% simple interest for 4 years.
(2) If Mark paid $5280 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(3) How much loan did Lisa borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6655 to clear it?
(4) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $10921 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 9% simple interest.
(6) Calculate the amount due if Christopher borrowed a sum of $4000 at 4% simple interest for 3 years.
(7) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 8% simple interest.
(8) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $7956 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Mary borrowed a sum of $3050 at 3% simple interest for 3 years.
(10) Find the amount to be paid if Richard borrowed a sum of $5600 at 5% simple interest for 8 years.