Question:
What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 7% simple interest?
Correct Answer
$5609
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 7% × 6
= $3950 ×7/100 × 6
= 3950 × 7 × 6/100
= 27650 × 6/100
= 165900/100
= $1659
Thus, Simple Interest = $1659
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 + $1659
= $5609
Thus, Amount to be paid = $5609 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) = 7%
And, Time (t) = 6 years
Thus, Amount (A)
= $3950 + ($3950 × 7% × 6)
= $3950 + ($3950 ×7/100 × 6)
= $3950 + (3950 × 7 × 6/100)
= $3950 + (27650 × 6/100)
= $3950 + (165900/100)
= $3950 + $1659 = $5609
Thus, Amount (A) to be paid = $5609 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 $3950, the simple interest in 1 year
= 7/100 × 3950
= 7 × 3950/100
= 27650/100 = $276.5
Thus, simple interest for 1 year = $276.5
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $276.5 × 6 = $1659
Thus, Simple Interest (SI) = $1659
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1659
= $5609
Thus, Amount to be paid = $5609 Answer
Similar Questions
(1) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $11247 to clear the loan, then find the time period of the loan.
(2) If Mark paid $4928 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(3) How much loan did Ashley borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7860 to clear it?
(4) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 7% simple interest.
(5) In how much time a principal of $3050 will amount to $3355 at a simple interest of 2% per annum?
(6) How much loan did George borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9125 to clear it?
(7) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $10200 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 2% simple interest.
(9) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9760 to clear the loan, then find the time period of the loan.
(10) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 2% simple interest?