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) If David paid $3944 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(2) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 8% simple interest.
(3) Kimberly had to pay $5068.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(4) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 6% simple interest?
(5) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 9% simple interest.
(6) How much loan did Mark borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7040 to clear it?
(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 9% simple interest?
(8) Sarah took a loan of $5700 at the rate of 9% simple interest per annum. If he paid an amount of $10830 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Susan borrowed a sum of $3650 at 10% simple interest for 3 years.
(10) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 5% simple interest.