Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 9% simple interest?
Correct Answer
$5727.5
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 9% × 5
= $3950 ×9/100 × 5
= 3950 × 9 × 5/100
= 35550 × 5/100
= 177750/100
= $1777.5
Thus, Simple Interest = $1777.5
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 + $1777.5
= $5727.5
Thus, Amount to be paid = $5727.5 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) = 9%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 9% × 5)
= $3950 + ($3950 ×9/100 × 5)
= $3950 + (3950 × 9 × 5/100)
= $3950 + (35550 × 5/100)
= $3950 + (177750/100)
= $3950 + $1777.5 = $5727.5
Thus, Amount (A) to be paid = $5727.5 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 $3950, the simple interest in 1 year
= 9/100 × 3950
= 9 × 3950/100
= 35550/100 = $355.5
Thus, simple interest for 1 year = $355.5
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $355.5 × 5 = $1777.5
Thus, Simple Interest (SI) = $1777.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1777.5
= $5727.5
Thus, Amount to be paid = $5727.5 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 7% simple interest.
(2) If Michael borrowed $3300 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) Find the amount to be paid if James borrowed a sum of $5000 at 10% simple interest for 7 years.
(4) Calculate the amount due if Michael borrowed a sum of $3300 at 3% simple interest for 4 years.
(5) Joseph had to pay $4255 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(6) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 10% simple interest.
(7) If Andrew paid $5568 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) Calculate the amount due if Thomas borrowed a sum of $3800 at 8% simple interest for 4 years.
(9) What amount does John have to pay after 6 years if he takes a loan of $3200 at 7% simple interest?
(10) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 3% simple interest?