Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 7% simple interest?
Correct Answer
$5400
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 7% × 5
= $4000 ×7/100 × 5
= 4000 × 7 × 5/100
= 28000 × 5/100
= 140000/100
= $1400
Thus, Simple Interest = $1400
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 = $4000 + $1400
= $5400
Thus, Amount to be paid = $5400 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 = $4000
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 7% × 5)
= $4000 + ($4000 ×7/100 × 5)
= $4000 + (4000 × 7 × 5/100)
= $4000 + (28000 × 5/100)
= $4000 + (140000/100)
= $4000 + $1400 = $5400
Thus, Amount (A) to be paid = $5400 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 $4000, the simple interest in 1 year
= 7/100 × 4000
= 7 × 4000/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $280 × 5 = $1400
Thus, Simple Interest (SI) = $1400
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1400
= $5400
Thus, Amount to be paid = $5400 Answer
Similar Questions
(1) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $8946 to clear the loan, then find the time period of the loan.
(2) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 4% simple interest?
(3) Find the amount to be paid if Karen borrowed a sum of $5950 at 4% simple interest for 8 years.
(4) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 5% simple interest?
(5) How much loan did Donna borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8220 to clear it?
(6) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 4% simple interest.
(7) If Donna paid $5820 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Thomas borrowed a sum of $3800 at 7% simple interest for 4 years.
(10) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 8% simple interest.