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) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $9632 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Charles borrowed a sum of $5900 at 2% simple interest for 7 years.
(3) How much loan did Ashley borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7205 to clear it?
(4) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 10% simple interest?
(5) Margaret took a loan of $6700 at the rate of 9% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.
(6) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 5% simple interest?
(7) Find the amount to be paid if Charles borrowed a sum of $5900 at 10% simple interest for 7 years.
(8) Calculate the amount due if James borrowed a sum of $3000 at 4% simple interest for 3 years.
(9) Find the amount to be paid if John borrowed a sum of $5200 at 3% simple interest for 7 years.
(10) Susan had to pay $3978.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.