Question:
What amount does David have to pay after 6 years if he takes a loan of $3400 at 4% simple interest?
Correct Answer
$4216
Solution And Explanation
Solution
Given,
Principal (P) = $3400
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) = $3400 × 4% × 6
= $3400 ×4/100 × 6
= 3400 × 4 × 6/100
= 13600 × 6/100
= 81600/100
= $816
Thus, Simple Interest = $816
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 = $3400 + $816
= $4216
Thus, Amount to be paid = $4216 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 = $3400
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3400 + ($3400 × 4% × 6)
= $3400 + ($3400 ×4/100 × 6)
= $3400 + (3400 × 4 × 6/100)
= $3400 + (13600 × 6/100)
= $3400 + (81600/100)
= $3400 + $816 = $4216
Thus, Amount (A) to be paid = $4216 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 $3400, the simple interest in 1 year
= 4/100 × 3400
= 4 × 3400/100
= 13600/100 = $136
Thus, simple interest for 1 year = $136
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $136 × 6 = $816
Thus, Simple Interest (SI) = $816
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $816
= $4216
Thus, Amount to be paid = $4216 Answer
Similar Questions
(1) Find the amount to be paid if Thomas borrowed a sum of $5800 at 7% simple interest for 8 years.
(2) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 9% simple interest for 8 years.
(3) How much loan did Brian borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7920 to clear it?
(4) If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(5) What amount will be due after 2 years if William borrowed a sum of $3250 at a 10% simple interest?
(6) What amount will be due after 2 years if David borrowed a sum of $3200 at a 5% simple interest?
(7) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $9548 to clear the loan, then find the time period of the loan.
(8) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6267.5 to clear it?
(9) Calculate the amount due if Mary borrowed a sum of $3050 at 5% simple interest for 4 years.
(10) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 7 years.