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) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $9204 to clear the loan, then find the time period of the loan.
(2) If Joseph paid $4292 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(3) Robert took a loan of $4200 at the rate of 10% simple interest per annum. If he paid an amount of $7560 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 7 years.
(5) Calculate the amount due if David borrowed a sum of $3400 at 2% simple interest for 3 years.
(6) If Paul paid $5640 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) How much loan did Jennifer borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6037.5 to clear it?
(8) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 3% simple interest.
(9) Mark had to pay $4796 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(10) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 8% simple interest.