Question:
What amount does Richard have to pay after 6 years if he takes a loan of $3600 at 4% simple interest?
Correct Answer
$4464
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 4% × 6
= $3600 ×4/100 × 6
= 3600 × 4 × 6/100
= 14400 × 6/100
= 86400/100
= $864
Thus, Simple Interest = $864
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 = $3600 + $864
= $4464
Thus, Amount to be paid = $4464 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 = $3600
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3600 + ($3600 × 4% × 6)
= $3600 + ($3600 ×4/100 × 6)
= $3600 + (3600 × 4 × 6/100)
= $3600 + (14400 × 6/100)
= $3600 + (86400/100)
= $3600 + $864 = $4464
Thus, Amount (A) to be paid = $4464 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 $3600, the simple interest in 1 year
= 4/100 × 3600
= 4 × 3600/100
= 14400/100 = $144
Thus, simple interest for 1 year = $144
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $144 × 6 = $864
Thus, Simple Interest (SI) = $864
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $864
= $4464
Thus, Amount to be paid = $4464 Answer
Similar Questions
(1) How much loan did Margaret borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7302.5 to clear it?
(2) Mark had to pay $4796 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(3) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 6% simple interest for 8 years.
(4) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(5) Calculate the amount due if Robert borrowed a sum of $3100 at 7% simple interest for 4 years.
(6) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $9204 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if William borrowed a sum of $3500 at 5% simple interest for 3 years.
(8) Find the amount to be paid if William borrowed a sum of $5500 at 3% simple interest for 7 years.
(9) Find the amount to be paid if Robert borrowed a sum of $5100 at 7% simple interest for 8 years.
(10) Calculate the amount due if Linda borrowed a sum of $3350 at 10% simple interest for 3 years.