Question:
What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 5% simple interest?
Correct Answer
$5135
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 5% × 6
= $3950 ×5/100 × 6
= 3950 × 5 × 6/100
= 19750 × 6/100
= 118500/100
= $1185
Thus, Simple Interest = $1185
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 + $1185
= $5135
Thus, Amount to be paid = $5135 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) = 5%
And, Time (t) = 6 years
Thus, Amount (A)
= $3950 + ($3950 × 5% × 6)
= $3950 + ($3950 ×5/100 × 6)
= $3950 + (3950 × 5 × 6/100)
= $3950 + (19750 × 6/100)
= $3950 + (118500/100)
= $3950 + $1185 = $5135
Thus, Amount (A) to be paid = $5135 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 $3950, the simple interest in 1 year
= 5/100 × 3950
= 5 × 3950/100
= 19750/100 = $197.5
Thus, simple interest for 1 year = $197.5
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $197.5 × 6 = $1185
Thus, Simple Interest (SI) = $1185
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1185
= $5135
Thus, Amount to be paid = $5135 Answer
Similar Questions
(1) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 2% simple interest?
(2) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 6% simple interest?
(3) Find the amount to be paid if Barbara borrowed a sum of $5550 at 5% simple interest for 8 years.
(4) Michael took a loan of $4600 at the rate of 6% simple interest per annum. If he paid an amount of $6256 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 10% simple interest.
(6) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 10% simple interest?
(7) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $10640 to clear the loan, then find the time period of the loan.
(8) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $8256 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if John borrowed a sum of $3200 at 4% simple interest for 4 years.
(10) Emily had to pay $5177.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.