Question:
What amount does William have to pay after 6 years if he takes a loan of $3500 at 5% simple interest?
Correct Answer
$4550
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 5%
Time (t) = 6 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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) = $3500 × 5% × 6
= $3500 ×5/100 × 6
= 3500 × 5 × 6/100
= 17500 × 6/100
= 105000/100
= $1050
Thus, Simple Interest = $1050
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 = $3500 + $1050
= $4550
Thus, Amount to be paid = $4550 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 = $3500
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 6 years
Thus, Amount (A)
= $3500 + ($3500 × 5% × 6)
= $3500 + ($3500 ×5/100 × 6)
= $3500 + (3500 × 5 × 6/100)
= $3500 + (17500 × 6/100)
= $3500 + (105000/100)
= $3500 + $1050 = $4550
Thus, Amount (A) to be paid = $4550 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $3500, the simple interest in 1 year
= 5/100 × 3500
= 5 × 3500/100
= 17500/100 = $175
Thus, simple interest for 1 year = $175
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $175 × 6 = $1050
Thus, Simple Interest (SI) = $1050
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $1050
= $4550
Thus, Amount to be paid = $4550 Answer
Similar Questions
(1) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8305 to clear it?
(2) David took a loan of $4800 at the rate of 6% simple interest per annum. If he paid an amount of $6816 to clear the loan, then find the time period of the loan.
(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) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(5) If Karen paid $4424 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 7% simple interest.
(7) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 3% simple interest for 7 years.
(8) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 3 years.
(9) What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 8% simple interest?
(10) Michelle had to pay $5544 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.