Question:
What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 7% simple interest?
Correct Answer
$5325
Solution And Explanation
Solution
Given,
Principal (P) = $3750
Rate of Simple Interest (SI) = 7%
Time (t) = 6 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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) = $3750 × 7% × 6
= $3750 ×7/100 × 6
= 3750 × 7 × 6/100
= 26250 × 6/100
= 157500/100
= $1575
Thus, Simple Interest = $1575
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 = $3750 + $1575
= $5325
Thus, Amount to be paid = $5325 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 = $3750
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 6 years
Thus, Amount (A)
= $3750 + ($3750 × 7% × 6)
= $3750 + ($3750 ×7/100 × 6)
= $3750 + (3750 × 7 × 6/100)
= $3750 + (26250 × 6/100)
= $3750 + (157500/100)
= $3750 + $1575 = $5325
Thus, Amount (A) to be paid = $5325 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $3750, the simple interest in 1 year
= 7/100 × 3750
= 7 × 3750/100
= 26250/100 = $262.5
Thus, simple interest for 1 year = $262.5
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $262.5 × 6 = $1575
Thus, Simple Interest (SI) = $1575
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $1575
= $5325
Thus, Amount to be paid = $5325 Answer
Similar Questions
(1) How much loan did Ryan borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9875 to clear it?
(2) Donald had to pay $4770 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(3) If Richard borrowed $3600 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(4) Calculate the amount due if Linda borrowed a sum of $3350 at 6% simple interest for 4 years.
(5) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $8550 to clear the loan, then find the time period of the loan.
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 7% simple interest?
(7) Calculate the amount due if Sarah borrowed a sum of $3850 at 2% simple interest for 4 years.
(8) Calculate the amount due if Mary borrowed a sum of $3050 at 2% simple interest for 3 years.
(9) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8312.5 to clear it?
(10) Calculate the amount due if Michael borrowed a sum of $3300 at 7% simple interest for 4 years.