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) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 5% simple interest.
(2) Find the amount to be paid if Mary borrowed a sum of $5050 at 2% simple interest for 7 years.
(3) What amount will be due after 2 years if David borrowed a sum of $3200 at a 4% simple interest?
(4) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 7% simple interest?
(5) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $6854 to clear the loan, then find the time period of the loan.
(6) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9860 to clear the loan, then find the time period of the loan.
(7) If Michael paid $3960 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 5% simple interest?
(9) Calculate the amount due if Sarah borrowed a sum of $3850 at 4% simple interest for 3 years.
(10) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6556 to clear the loan, then find the time period of the loan.