Question:
Find the amount to be paid if James borrowed a sum of $5000 at 2% simple interest for 7 years.
Correct Answer
$5700
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 2%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $5000 × 2% × 7
= $5000 ×2/100 × 7
= 5000 × 2 × 7/100
= 10000 × 7/100
= 70000/100
= $700
Thus, Simple Interest = $700
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 = $5000 + $700
= $5700
Thus, Amount to be paid = $5700 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 = $5000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 2% × 7)
= $5000 + ($5000 ×2/100 × 7)
= $5000 + (5000 × 2 × 7/100)
= $5000 + (10000 × 7/100)
= $5000 + (70000/100)
= $5000 + $700 = $5700
Thus, Amount (A) to be paid = $5700 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $5000, the simple interest in 1 year
= 2/100 × 5000
= 2 × 5000/100
= 10000/100 = $100
Thus, simple interest for 1 year = $100
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $100 × 7 = $700
Thus, Simple Interest (SI) = $700
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $700
= $5700
Thus, Amount to be paid = $5700 Answer
Similar Questions
(1) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(2) Steven had to pay $5290 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(3) Ashley had to pay $5232.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(4) Kimberly had to pay $5347.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 8% simple interest?
(6) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $13110 to clear the loan, then find the time period of the loan.
(7) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(8) Paul had to pay $5405 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(9) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 3% simple interest?
(10) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 3 years.