Question:
What amount does William have to pay after 6 years if he takes a loan of $3500 at 2% simple interest?
Correct Answer
$3920
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 2% × 6
= $3500 ×2/100 × 6
= 3500 × 2 × 6/100
= 7000 × 6/100
= 42000/100
= $420
Thus, Simple Interest = $420
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 = $3500 + $420
= $3920
Thus, Amount to be paid = $3920 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 = $3500
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 6 years
Thus, Amount (A)
= $3500 + ($3500 × 2% × 6)
= $3500 + ($3500 ×2/100 × 6)
= $3500 + (3500 × 2 × 6/100)
= $3500 + (7000 × 6/100)
= $3500 + (42000/100)
= $3500 + $420 = $3920
Thus, Amount (A) to be paid = $3920 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 $3500, the simple interest in 1 year
= 2/100 × 3500
= 2 × 3500/100
= 7000/100 = $70
Thus, simple interest for 1 year = $70
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $70 × 6 = $420
Thus, Simple Interest (SI) = $420
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $420
= $3920
Thus, Amount to be paid = $3920 Answer
Similar Questions
(1) How much loan did Joseph borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6555 to clear it?
(2) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 6% simple interest?
(3) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(4) In how much time a principal of $3150 will amount to $3402 at a simple interest of 2% per annum?
(5) Calculate the amount due if Christopher borrowed a sum of $4000 at 10% simple interest for 3 years.
(6) Lisa took a loan of $6100 at the rate of 7% simple interest per annum. If he paid an amount of $9943 to clear the loan, then find the time period of the loan.
(7) If Daniel paid $4428 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(8) William had to pay $4025 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(9) In how much time a principal of $3150 will amount to $3339 at a simple interest of 3% per annum?
(10) Barbara had to pay $4082.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.