Question:
What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 2% simple interest?
Correct Answer
$4424
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 2% × 6
= $3950 ×2/100 × 6
= 3950 × 2 × 6/100
= 7900 × 6/100
= 47400/100
= $474
Thus, Simple Interest = $474
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 = $3950 + $474
= $4424
Thus, Amount to be paid = $4424 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 = $3950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 6 years
Thus, Amount (A)
= $3950 + ($3950 × 2% × 6)
= $3950 + ($3950 ×2/100 × 6)
= $3950 + (3950 × 2 × 6/100)
= $3950 + (7900 × 6/100)
= $3950 + (47400/100)
= $3950 + $474 = $4424
Thus, Amount (A) to be paid = $4424 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 $3950, the simple interest in 1 year
= 2/100 × 3950
= 2 × 3950/100
= 7900/100 = $79
Thus, simple interest for 1 year = $79
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $79 × 6 = $474
Thus, Simple Interest (SI) = $474
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $474
= $4424
Thus, Amount to be paid = $4424 Answer
Similar Questions
(1) Susan had to pay $4088 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Calculate the amount due if Michael borrowed a sum of $3300 at 5% simple interest for 4 years.
(3) Joseph took a loan of $5400 at the rate of 9% simple interest per annum. If he paid an amount of $8316 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.
(5) In how much time a principal of $3050 will amount to $3812.5 at a simple interest of 5% per annum?
(6) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $7360 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 9% simple interest?
(8) What amount does William have to pay after 6 years if he takes a loan of $3500 at 5% simple interest?
(9) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 10% simple interest?
(10) If Susan paid $4088 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.