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) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $8268 to clear the loan, then find the time period of the loan.
(2) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7242 to clear the loan, then find the time period of the loan.
(3) How much loan did David borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6480 to clear it?
(4) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 4% simple interest?
(5) Thomas took a loan of $5600 at the rate of 7% simple interest per annum. If he paid an amount of $8736 to clear the loan, then find the time period of the loan.
(6) Anthony had to pay $4558 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 4% simple interest?
(8) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 7% simple interest.
(9) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 9% simple interest?
(10) In how much time a principal of $3200 will amount to $3392 at a simple interest of 3% per annum?