Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 7% simple interest?
Correct Answer
$5332.5
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 7% × 5
= $3950 ×7/100 × 5
= 3950 × 7 × 5/100
= 27650 × 5/100
= 138250/100
= $1382.5
Thus, Simple Interest = $1382.5
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 = $3950 + $1382.5
= $5332.5
Thus, Amount to be paid = $5332.5 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 = $3950
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 7% × 5)
= $3950 + ($3950 ×7/100 × 5)
= $3950 + (3950 × 7 × 5/100)
= $3950 + (27650 × 5/100)
= $3950 + (138250/100)
= $3950 + $1382.5 = $5332.5
Thus, Amount (A) to be paid = $5332.5 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 $3950, the simple interest in 1 year
= 7/100 × 3950
= 7 × 3950/100
= 27650/100 = $276.5
Thus, simple interest for 1 year = $276.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $276.5 × 5 = $1382.5
Thus, Simple Interest (SI) = $1382.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1382.5
= $5332.5
Thus, Amount to be paid = $5332.5 Answer
Similar Questions
(1) Steven had to pay $5152 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) In how much time a principal of $3150 will amount to $3402 at a simple interest of 2% per annum?
(3) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $11970 to clear the loan, then find the time period of the loan.
(4) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 4 years.
(6) How much loan did Mark borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7360 to clear it?
(7) Elizabeth had to pay $3864 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(8) James took a loan of $4000 at the rate of 9% simple interest per annum. If he paid an amount of $7240 to clear the loan, then find the time period of the loan.
(9) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $6160 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Thomas borrowed a sum of $3800 at 9% simple interest for 4 years.