Question:
What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 4% simple interest?
Correct Answer
$4774
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 4% × 6
= $3850 ×4/100 × 6
= 3850 × 4 × 6/100
= 15400 × 6/100
= 92400/100
= $924
Thus, Simple Interest = $924
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 = $3850 + $924
= $4774
Thus, Amount to be paid = $4774 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 = $3850
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3850 + ($3850 × 4% × 6)
= $3850 + ($3850 ×4/100 × 6)
= $3850 + (3850 × 4 × 6/100)
= $3850 + (15400 × 6/100)
= $3850 + (92400/100)
= $3850 + $924 = $4774
Thus, Amount (A) to be paid = $4774 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 $3850, the simple interest in 1 year
= 4/100 × 3850
= 4 × 3850/100
= 15400/100 = $154
Thus, simple interest for 1 year = $154
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $154 × 6 = $924
Thus, Simple Interest (SI) = $924
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $924
= $4774
Thus, Amount to be paid = $4774 Answer
Similar Questions
(1) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $10432 to clear the loan, then find the time period of the loan.
(2) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $7040 to clear the loan, then find the time period of the loan.
(3) If Barbara borrowed $3550 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) In how much time a principal of $3100 will amount to $3379 at a simple interest of 3% per annum?
(5) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 3% simple interest?
(6) Betty took a loan of $6500 at the rate of 10% simple interest per annum. If he paid an amount of $13000 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Mary borrowed a sum of $3050 at 6% simple interest for 3 years.
(8) What amount does James have to pay after 5 years if he takes a loan of $3000 at 3% simple interest?
(9) In how much time a principal of $3150 will amount to $3465 at a simple interest of 5% per annum?
(10) Find the amount to be paid if William borrowed a sum of $5500 at 8% simple interest for 7 years.