Question:
What amount does James have to pay after 6 years if he takes a loan of $3000 at 4% simple interest?
Correct Answer
$3720
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 4%
Time (t) = 6 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $3000 × 4% × 6
= $3000 ×4/100 × 6
= 3000 × 4 × 6/100
= 12000 × 6/100
= 72000/100
= $720
Thus, Simple Interest = $720
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 = $3000 + $720
= $3720
Thus, Amount to be paid = $3720 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 = $3000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3000 + ($3000 × 4% × 6)
= $3000 + ($3000 ×4/100 × 6)
= $3000 + (3000 × 4 × 6/100)
= $3000 + (12000 × 6/100)
= $3000 + (72000/100)
= $3000 + $720 = $3720
Thus, Amount (A) to be paid = $3720 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $3000, the simple interest in 1 year
= 4/100 × 3000
= 4 × 3000/100
= 12000/100 = $120
Thus, simple interest for 1 year = $120
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $120 × 6 = $720
Thus, Simple Interest (SI) = $720
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $720
= $3720
Thus, Amount to be paid = $3720 Answer
Similar Questions
(1) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9916 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 5% simple interest.
(3) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(4) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 8% simple interest.
(5) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 8% simple interest?
(6) Margaret had to pay $4741.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(7) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $7052 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if William borrowed a sum of $3500 at 4% simple interest for 3 years.
(9) If Nancy paid $4980 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.