Question:
What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 4% simple interest?
Correct Answer
$4960
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 4% × 6
= $4000 ×4/100 × 6
= 4000 × 4 × 6/100
= 16000 × 6/100
= 96000/100
= $960
Thus, Simple Interest = $960
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 = $4000 + $960
= $4960
Thus, Amount to be paid = $4960 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 = $4000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 6 years
Thus, Amount (A)
= $4000 + ($4000 × 4% × 6)
= $4000 + ($4000 ×4/100 × 6)
= $4000 + (4000 × 4 × 6/100)
= $4000 + (16000 × 6/100)
= $4000 + (96000/100)
= $4000 + $960 = $4960
Thus, Amount (A) to be paid = $4960 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 $4000, the simple interest in 1 year
= 4/100 × 4000
= 4 × 4000/100
= 16000/100 = $160
Thus, simple interest for 1 year = $160
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $160 × 6 = $960
Thus, Simple Interest (SI) = $960
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $960
= $4960
Thus, Amount to be paid = $4960 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 5% simple interest.
(2) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 5% simple interest?
(3) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 9% simple interest.
(4) Calculate the amount due if Thomas borrowed a sum of $3800 at 3% simple interest for 3 years.
(5) Calculate the amount due if William borrowed a sum of $3500 at 6% simple interest for 3 years.
(6) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 5% simple interest.
(7) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 2% simple interest?
(8) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $7400 to clear the loan, then find the time period of the loan.
(9) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 8% simple interest?
(10) Sandra took a loan of $6900 at the rate of 8% simple interest per annum. If he paid an amount of $10212 to clear the loan, then find the time period of the loan.