Question:
What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 2% simple interest?
Correct Answer
$4032
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 2% × 6
= $3600 ×2/100 × 6
= 3600 × 2 × 6/100
= 7200 × 6/100
= 43200/100
= $432
Thus, Simple Interest = $432
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 = $3600 + $432
= $4032
Thus, Amount to be paid = $4032 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 = $3600
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 6 years
Thus, Amount (A)
= $3600 + ($3600 × 2% × 6)
= $3600 + ($3600 ×2/100 × 6)
= $3600 + (3600 × 2 × 6/100)
= $3600 + (7200 × 6/100)
= $3600 + (43200/100)
= $3600 + $432 = $4032
Thus, Amount (A) to be paid = $4032 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 $3600, the simple interest in 1 year
= 2/100 × 3600
= 2 × 3600/100
= 7200/100 = $72
Thus, simple interest for 1 year = $72
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $72 × 6 = $432
Thus, Simple Interest (SI) = $432
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $432
= $4032
Thus, Amount to be paid = $4032 Answer
Similar Questions
(1) Calculate the amount due if William borrowed a sum of $3500 at 10% simple interest for 4 years.
(2) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $8112 to clear the loan, then find the time period of the loan.
(3) If John paid $3712 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(4) Susan had to pay $3978.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) Calculate the amount due if David borrowed a sum of $3400 at 3% simple interest for 4 years.
(6) Mary took a loan of $4100 at the rate of 7% simple interest per annum. If he paid an amount of $5822 to clear the loan, then find the time period of the loan.
(7) Margaret had to pay $5002.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(8) In how much time a principal of $3200 will amount to $3392 at a simple interest of 3% per annum?
(9) How much loan did Amanda borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8222.5 to clear it?
(10) Find the amount to be paid if James borrowed a sum of $5000 at 2% simple interest for 7 years.