Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 9% simple interest?
Correct Answer
$4640
Solution And Explanation
Solution
Given,
Principal (P) = $3200
Rate of Simple Interest (SI) = 9%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 9% simple interest means, Rate of Simple Interest (SI) is 9% 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) = $3200 × 9% × 5
= $3200 ×9/100 × 5
= 3200 × 9 × 5/100
= 28800 × 5/100
= 144000/100
= $1440
Thus, Simple Interest = $1440
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 = $3200 + $1440
= $4640
Thus, Amount to be paid = $4640 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 = $3200
Rate of Simple Interest (SI) or (R) = 9%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 9% × 5)
= $3200 + ($3200 ×9/100 × 5)
= $3200 + (3200 × 9 × 5/100)
= $3200 + (28800 × 5/100)
= $3200 + (144000/100)
= $3200 + $1440 = $4640
Thus, Amount (A) to be paid = $4640 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 9%
This, means, $9 per $100 per year
∵ For $100, the simple interest for 1 year = $9
∴ For $1, the simple interest for 1 year = 9/100
∴ For $3200, the simple interest in 1 year
= 9/100 × 3200
= 9 × 3200/100
= 28800/100 = $288
Thus, simple interest for 1 year = $288
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $288 × 5 = $1440
Thus, Simple Interest (SI) = $1440
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $1440
= $4640
Thus, Amount to be paid = $4640 Answer
Similar Questions
(1) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 8% simple interest?
(2) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $7990 to clear the loan, then find the time period of the loan.
(3) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 5% simple interest?
(4) In how much time a principal of $3200 will amount to $3328 at a simple interest of 2% per annum?
(5) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $6248 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if James borrowed a sum of $3000 at 2% simple interest for 4 years.
(7) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 3% simple interest.
(8) How much loan did Mark borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8000 to clear it?
(9) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(10) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.