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) How much loan did Joshua borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8625 to clear it?
(2) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 9% simple interest?
(3) Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 4 years.
(4) Calculate the amount due if Charles borrowed a sum of $3900 at 5% simple interest for 3 years.
(5) In how much time a principal of $3200 will amount to $3680 at a simple interest of 3% per annum?
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 7% simple interest?
(7) How much loan did Amanda borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8937.5 to clear it?
(8) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 3% simple interest.
(9) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $10200 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Richard borrowed a sum of $3600 at 6% simple interest for 4 years.