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) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.
(2) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $9632 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.
(4) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 7% simple interest?
(5) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 4% simple interest?
(6) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 10% simple interest?
(7) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(8) Daniel took a loan of $6200 at the rate of 10% simple interest per annum. If he paid an amount of $10540 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 3% simple interest.
(10) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 3% simple interest.