Question:
What amount does David have to pay after 6 years if he takes a loan of $3400 at 2% simple interest?
Correct Answer
$3808
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 2%
Time (t) = 6 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $3400 × 2% × 6
= $3400 ×2/100 × 6
= 3400 × 2 × 6/100
= 6800 × 6/100
= 40800/100
= $408
Thus, Simple Interest = $408
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 = $3400 + $408
= $3808
Thus, Amount to be paid = $3808 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 = $3400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 6 years
Thus, Amount (A)
= $3400 + ($3400 × 2% × 6)
= $3400 + ($3400 ×2/100 × 6)
= $3400 + (3400 × 2 × 6/100)
= $3400 + (6800 × 6/100)
= $3400 + (40800/100)
= $3400 + $408 = $3808
Thus, Amount (A) to be paid = $3808 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $3400, the simple interest in 1 year
= 2/100 × 3400
= 2 × 3400/100
= 6800/100 = $68
Thus, simple interest for 1 year = $68
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $68 × 6 = $408
Thus, Simple Interest (SI) = $408
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $408
= $3808
Thus, Amount to be paid = $3808 Answer
Similar Questions
(1) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 7% simple interest?
(2) How much loan did Patricia borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5665 to clear it?
(3) How much loan did Sarah borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6435 to clear it?
(4) If Thomas paid $4256 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(5) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 5% simple interest?
(6) Calculate the amount due if Christopher borrowed a sum of $4000 at 8% simple interest for 3 years.
(7) How much loan did Jessica borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7187.5 to clear it?
(8) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 4% simple interest.
(9) How much loan did Donald borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7150 to clear it?
(10) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 8% simple interest?