Question:
Find the amount to be paid if Michael borrowed a sum of $5300 at 2% simple interest for 7 years.
Correct Answer
$6042
Solution And Explanation
Solution
Given,
Principal (P) = $5300
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) = $5300 × 2% × 7
= $5300 ×2/100 × 7
= 5300 × 2 × 7/100
= 10600 × 7/100
= 74200/100
= $742
Thus, Simple Interest = $742
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 = $5300 + $742
= $6042
Thus, Amount to be paid = $6042 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 = $5300
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 7 years
Thus, Amount (A)
= $5300 + ($5300 × 2% × 7)
= $5300 + ($5300 ×2/100 × 7)
= $5300 + (5300 × 2 × 7/100)
= $5300 + (10600 × 7/100)
= $5300 + (74200/100)
= $5300 + $742 = $6042
Thus, Amount (A) to be paid = $6042 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 $5300, the simple interest in 1 year
= 2/100 × 5300
= 2 × 5300/100
= 10600/100 = $106
Thus, simple interest for 1 year = $106
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $106 × 7 = $742
Thus, Simple Interest (SI) = $742
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5300 + $742
= $6042
Thus, Amount to be paid = $6042 Answer
Similar Questions
(1) Calculate the amount due if Michael borrowed a sum of $3300 at 9% simple interest for 4 years.
(2) Christopher took a loan of $6000 at the rate of 10% simple interest per annum. If he paid an amount of $10800 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 5% simple interest.
(4) Find the amount to be paid if Karen borrowed a sum of $5950 at 9% simple interest for 8 years.
(5) If Kenneth paid $5800 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 9% simple interest for 7 years.
(7) How much loan did Lisa borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7562.5 to clear it?
(8) Find the amount to be paid if Robert borrowed a sum of $5100 at 2% simple interest for 7 years.
(9) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(10) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $6314 to clear the loan, then find the time period of the loan.