Question:
What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 2% simple interest?
Correct Answer
$4480
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 2% × 6
= $4000 ×2/100 × 6
= 4000 × 2 × 6/100
= 8000 × 6/100
= 48000/100
= $480
Thus, Simple Interest = $480
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 = $4000 + $480
= $4480
Thus, Amount to be paid = $4480 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 = $4000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 6 years
Thus, Amount (A)
= $4000 + ($4000 × 2% × 6)
= $4000 + ($4000 ×2/100 × 6)
= $4000 + (4000 × 2 × 6/100)
= $4000 + (8000 × 6/100)
= $4000 + (48000/100)
= $4000 + $480 = $4480
Thus, Amount (A) to be paid = $4480 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 $4000, the simple interest in 1 year
= 2/100 × 4000
= 2 × 4000/100
= 8000/100 = $80
Thus, simple interest for 1 year = $80
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $80 × 6 = $480
Thus, Simple Interest (SI) = $480
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $480
= $4480
Thus, Amount to be paid = $4480 Answer
Similar Questions
(1) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $7310 to clear the loan, then find the time period of the loan.
(2) Mark had to pay $4928 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(3) If Steven paid $5520 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Find the amount to be paid if Sarah borrowed a sum of $5850 at 3% simple interest for 7 years.
(5) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 8% simple interest?
(6) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 8% simple interest.
(7) Emily had to pay $5320 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(8) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $7990 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Michael borrowed a sum of $5300 at 5% simple interest for 8 years.
(10) Ashley had to pay $4823 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.