Question:
What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 4% simple interest?
Correct Answer
$4588
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 4% × 6
= $3700 ×4/100 × 6
= 3700 × 4 × 6/100
= 14800 × 6/100
= 88800/100
= $888
Thus, Simple Interest = $888
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 = $3700 + $888
= $4588
Thus, Amount to be paid = $4588 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 = $3700
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3700 + ($3700 × 4% × 6)
= $3700 + ($3700 ×4/100 × 6)
= $3700 + (3700 × 4 × 6/100)
= $3700 + (14800 × 6/100)
= $3700 + (88800/100)
= $3700 + $888 = $4588
Thus, Amount (A) to be paid = $4588 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 $3700, the simple interest in 1 year
= 4/100 × 3700
= 4 × 3700/100
= 14800/100 = $148
Thus, simple interest for 1 year = $148
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $148 × 6 = $888
Thus, Simple Interest (SI) = $888
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $888
= $4588
Thus, Amount to be paid = $4588 Answer
Similar Questions
(1) Matthew took a loan of $6400 at the rate of 7% simple interest per annum. If he paid an amount of $9088 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Robert borrowed a sum of $5100 at 7% simple interest for 8 years.
(3) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
(4) How much loan did Mary borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5555 to clear it?
(5) In how much time a principal of $3200 will amount to $4000 at a simple interest of 5% per annum?
(6) If William paid $4200 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) If Barbara paid $4260 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 5% simple interest.
(9) If Elizabeth paid $4140 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(10) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 2% simple interest?