Question:
Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 7 years.
Correct Answer
$6327
Solution And Explanation
Solution
Given,
Principal (P) = $5550
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) = $5550 × 2% × 7
= $5550 ×2/100 × 7
= 5550 × 2 × 7/100
= 11100 × 7/100
= 77700/100
= $777
Thus, Simple Interest = $777
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 = $5550 + $777
= $6327
Thus, Amount to be paid = $6327 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 = $5550
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 7 years
Thus, Amount (A)
= $5550 + ($5550 × 2% × 7)
= $5550 + ($5550 ×2/100 × 7)
= $5550 + (5550 × 2 × 7/100)
= $5550 + (11100 × 7/100)
= $5550 + (77700/100)
= $5550 + $777 = $6327
Thus, Amount (A) to be paid = $6327 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 $5550, the simple interest in 1 year
= 2/100 × 5550
= 2 × 5550/100
= 11100/100 = $111
Thus, simple interest for 1 year = $111
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $111 × 7 = $777
Thus, Simple Interest (SI) = $777
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5550 + $777
= $6327
Thus, Amount to be paid = $6327 Answer
Similar Questions
(1) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(2) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 10% simple interest?
(3) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 10% simple interest.
(4) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $6160 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Michael borrowed a sum of $5300 at 2% simple interest for 8 years.
(6) Calculate the amount due if Mary borrowed a sum of $3050 at 2% simple interest for 4 years.
(7) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $7987 to clear the loan, then find the time period of the loan.
(8) Lisa took a loan of $6100 at the rate of 8% simple interest per annum. If he paid an amount of $10492 to clear the loan, then find the time period of the loan.
(9) How much loan did Richard borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7000 to clear it?
(10) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 9% simple interest?