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) If Mary paid $3660 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 10% simple interest.
(3) Find the amount to be paid if Karen borrowed a sum of $5950 at 10% simple interest for 8 years.
(4) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 7% simple interest.
(5) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $10296 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if William borrowed a sum of $3500 at 9% simple interest for 4 years.
(7) Calculate the amount due if Sarah borrowed a sum of $3850 at 10% simple interest for 3 years.
(8) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $8944 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Christopher borrowed a sum of $4000 at 6% simple interest for 3 years.
(10) Calculate the amount due if Patricia borrowed a sum of $3150 at 2% simple interest for 4 years.