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 if John borrowed a sum of $3200 at 5% simple interest for 3 years.
(2) Mark took a loan of $6800 at the rate of 6% simple interest per annum. If he paid an amount of $10472 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if John borrowed a sum of $3200 at 6% simple interest for 4 years.
(4) If Susan borrowed $3650 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(5) In how much time a principal of $3150 will amount to $3622.5 at a simple interest of 3% per annum?
(6) If Sarah borrowed $3850 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(7) Calculate the amount due if Richard borrowed a sum of $3600 at 10% simple interest for 3 years.
(8) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 10% simple interest.
(9) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(10) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $7520 to clear the loan, then find the time period of the loan.