Question:
Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 7 years.
Correct Answer
$6156
Solution And Explanation
Solution
Given,
Principal (P) = $5400
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) = $5400 × 2% × 7
= $5400 ×2/100 × 7
= 5400 × 2 × 7/100
= 10800 × 7/100
= 75600/100
= $756
Thus, Simple Interest = $756
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 = $5400 + $756
= $6156
Thus, Amount to be paid = $6156 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 = $5400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 7 years
Thus, Amount (A)
= $5400 + ($5400 × 2% × 7)
= $5400 + ($5400 ×2/100 × 7)
= $5400 + (5400 × 2 × 7/100)
= $5400 + (10800 × 7/100)
= $5400 + (75600/100)
= $5400 + $756 = $6156
Thus, Amount (A) to be paid = $6156 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 $5400, the simple interest in 1 year
= 2/100 × 5400
= 2 × 5400/100
= 10800/100 = $108
Thus, simple interest for 1 year = $108
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $108 × 7 = $756
Thus, Simple Interest (SI) = $756
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5400 + $756
= $6156
Thus, Amount to be paid = $6156 Answer
Similar Questions
(1) How much loan did Betty borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7812.5 to clear it?
(2) Mary took a loan of $4100 at the rate of 7% simple interest per annum. If he paid an amount of $6970 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Jessica borrowed a sum of $5750 at 6% simple interest for 7 years.
(4) How much loan did Anthony borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7245 to clear it?
(5) If Michelle paid $5346 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $9690 to clear the loan, then find the time period of the loan.
(7) How much loan did Paul borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7705 to clear it?
(8) In how much time a principal of $3100 will amount to $3875 at a simple interest of 5% per annum?
(9) Robert took a loan of $4200 at the rate of 6% simple interest per annum. If he paid an amount of $6468 to clear the loan, then find the time period of the loan.
(10) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 9% simple interest?