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) If Jennifer paid $3900 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Richard took a loan of $5200 at the rate of 7% simple interest per annum. If he paid an amount of $7384 to clear the loan, then find the time period of the loan.
(3) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $6258 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 9% simple interest for 7 years.
(5) What amount will be due after 2 years if John borrowed a sum of $3100 at a 10% simple interest?
(6) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7003 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Jessica borrowed a sum of $5750 at a rate of 8% simple interest.
(8) David had to pay $3706 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) Find the amount to be paid if Sarah borrowed a sum of $5850 at 7% simple interest for 7 years.
(10) Calculate the amount due if Sarah borrowed a sum of $3850 at 8% simple interest for 4 years.