Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 10% simple interest?
Correct Answer
$5925
Solution And Explanation
Solution
Given,
Principal (P) = $3950
Rate of Simple Interest (SI) = 10%
Time (t) = 5 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 10% simple interest means, Rate of Simple Interest (SI) is 10% 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 × 10% × 5
= $3950 ×10/100 × 5
= 3950 × 10 × 5/100
= 39500 × 5/100
= 197500/100
= $1975
Thus, Simple Interest = $1975
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 + $1975
= $5925
Thus, Amount to be paid = $5925 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) = 10%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 10% × 5)
= $3950 + ($3950 ×10/100 × 5)
= $3950 + (3950 × 10 × 5/100)
= $3950 + (39500 × 5/100)
= $3950 + (197500/100)
= $3950 + $1975 = $5925
Thus, Amount (A) to be paid = $5925 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 10%
This, means, $10 per $100 per year
∵ For $100, the simple interest for 1 year = $10
∴ For $1, the simple interest for 1 year = 10/100
∴ For $3950, the simple interest in 1 year
= 10/100 × 3950
= 10 × 3950/100
= 39500/100 = $395
Thus, simple interest for 1 year = $395
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $395 × 5 = $1975
Thus, Simple Interest (SI) = $1975
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1975
= $5925
Thus, Amount to be paid = $5925 Answer
Similar Questions
(1) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $7084 to clear the loan, then find the time period of the loan.
(2) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 6% simple interest?
(3) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 8% simple interest.
(4) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 6% simple interest?
(5) Find the amount to be paid if Christopher borrowed a sum of $6000 at 8% simple interest for 7 years.
(6) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 6% simple interest.
(7) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 10% simple interest for 4 years.
(8) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 4% simple interest for 8 years.
(9) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 7% simple interest?
(10) Find the amount to be paid if Sarah borrowed a sum of $5850 at 2% simple interest for 7 years.