Question:
What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 4% simple interest?
Correct Answer
$4898
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 4% × 6
= $3950 ×4/100 × 6
= 3950 × 4 × 6/100
= 15800 × 6/100
= 94800/100
= $948
Thus, Simple Interest = $948
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 = $3950 + $948
= $4898
Thus, Amount to be paid = $4898 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 = $3950
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $3950 + ($3950 × 4% × 6)
= $3950 + ($3950 ×4/100 × 6)
= $3950 + (3950 × 4 × 6/100)
= $3950 + (15800 × 6/100)
= $3950 + (94800/100)
= $3950 + $948 = $4898
Thus, Amount (A) to be paid = $4898 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 $3950, the simple interest in 1 year
= 4/100 × 3950
= 4 × 3950/100
= 15800/100 = $158
Thus, simple interest for 1 year = $158
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $158 × 6 = $948
Thus, Simple Interest (SI) = $948
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $948
= $4898
Thus, Amount to be paid = $4898 Answer
Similar Questions
(1) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 6% simple interest.
(3) How much loan did Ronald borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9375 to clear it?
(4) Calculate the amount due if Jessica borrowed a sum of $3750 at 6% simple interest for 4 years.
(5) Daniel had to pay $4469 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(7) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $9900 to clear the loan, then find the time period of the loan.
(8) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $8692 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 7% simple interest.
(10) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 5% simple interest for 4 years.