Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 10% simple interest?
Correct Answer
$6000
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 10% × 5
= $4000 ×10/100 × 5
= 4000 × 10 × 5/100
= 40000 × 5/100
= 200000/100
= $2000
Thus, Simple Interest = $2000
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 + $2000
= $6000
Thus, Amount to be paid = $6000 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) = 10%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 10% × 5)
= $4000 + ($4000 ×10/100 × 5)
= $4000 + (4000 × 10 × 5/100)
= $4000 + (40000 × 5/100)
= $4000 + (200000/100)
= $4000 + $2000 = $6000
Thus, Amount (A) to be paid = $6000 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 $4000, the simple interest in 1 year
= 10/100 × 4000
= 10 × 4000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $400 × 5 = $2000
Thus, Simple Interest (SI) = $2000
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $2000
= $6000
Thus, Amount to be paid = $6000 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 3% simple interest.
(2) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $8840 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Christopher borrowed a sum of $6000 at 6% simple interest for 8 years.
(4) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 2% simple interest for 8 years.
(5) Calculate the amount due if Susan borrowed a sum of $3650 at 5% simple interest for 3 years.
(6) Karen took a loan of $5900 at the rate of 9% simple interest per annum. If he paid an amount of $10148 to clear the loan, then find the time period of the loan.
(7) Find the amount to be paid if Michael borrowed a sum of $5300 at 7% simple interest for 8 years.
(8) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 10% simple interest.
(9) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 9% simple interest.
(10) Lisa took a loan of $6100 at the rate of 7% simple interest per annum. If he paid an amount of $9089 to clear the loan, then find the time period of the loan.