Question:
What amount does John have to pay after 6 years if he takes a loan of $3200 at 4% simple interest?
Correct Answer
$3968
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 4% × 6
= $3200 ×4/100 × 6
= 3200 × 4 × 6/100
= 12800 × 6/100
= 76800/100
= $768
Thus, Simple Interest = $768
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 = $3200 + $768
= $3968
Thus, Amount to be paid = $3968 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 = $3200
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3200 + ($3200 × 4% × 6)
= $3200 + ($3200 ×4/100 × 6)
= $3200 + (3200 × 4 × 6/100)
= $3200 + (12800 × 6/100)
= $3200 + (76800/100)
= $3200 + $768 = $3968
Thus, Amount (A) to be paid = $3968 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 $3200, the simple interest in 1 year
= 4/100 × 3200
= 4 × 3200/100
= 12800/100 = $128
Thus, simple interest for 1 year = $128
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $128 × 6 = $768
Thus, Simple Interest (SI) = $768
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $768
= $3968
Thus, Amount to be paid = $3968 Answer
Similar Questions
(1) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $7488 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Charles borrowed a sum of $3900 at 7% simple interest for 4 years.
(3) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 6% simple interest?
(4) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(5) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 7% simple interest?
(6) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 5% simple interest?
(7) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(8) William took a loan of $5000 at the rate of 9% simple interest per annum. If he paid an amount of $9050 to clear the loan, then find the time period of the loan.
(9) How much loan did Rebecca borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8797.5 to clear it?
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 3% simple interest?