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) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $10860 to clear the loan, then find the time period of the loan.
(2) What amount does James have to pay after 6 years if he takes a loan of $3000 at 10% simple interest?
(3) What amount will be due after 2 years if John borrowed a sum of $3100 at a 6% simple interest?
(4) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 2% simple interest.
(5) Karen took a loan of $5900 at the rate of 6% simple interest per annum. If he paid an amount of $8732 to clear the loan, then find the time period of the loan.
(6) In how much time a principal of $3200 will amount to $3520 at a simple interest of 2% per annum?
(7) How much loan did Sharon borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8525 to clear it?
(8) In how much time a principal of $3100 will amount to $3720 at a simple interest of 4% per annum?
(9) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 4% simple interest?
(10) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $7052 to clear the loan, then find the time period of the loan.