Question:
Find the amount to be paid if Karen borrowed a sum of $5950 at 2% simple interest for 7 years.
Correct Answer
$6783
Solution And Explanation
Solution
Given,
Principal (P) = $5950
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) = $5950 × 2% × 7
= $5950 ×2/100 × 7
= 5950 × 2 × 7/100
= 11900 × 7/100
= 83300/100
= $833
Thus, Simple Interest = $833
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 = $5950 + $833
= $6783
Thus, Amount to be paid = $6783 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 = $5950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 7 years
Thus, Amount (A)
= $5950 + ($5950 × 2% × 7)
= $5950 + ($5950 ×2/100 × 7)
= $5950 + (5950 × 2 × 7/100)
= $5950 + (11900 × 7/100)
= $5950 + (83300/100)
= $5950 + $833 = $6783
Thus, Amount (A) to be paid = $6783 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 $5950, the simple interest in 1 year
= 2/100 × 5950
= 2 × 5950/100
= 11900/100 = $119
Thus, simple interest for 1 year = $119
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $119 × 7 = $833
Thus, Simple Interest (SI) = $833
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $833
= $6783
Thus, Amount to be paid = $6783 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 4% simple interest.
(2) If Sandra paid $5340 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(3) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $12540 to clear the loan, then find the time period of the loan.
(4) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(5) What amount will be due after 2 years if James borrowed a sum of $3000 at a 9% simple interest?
(6) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $10450 to clear the loan, then find the time period of the loan.
(7) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 7% simple interest?
(8) Mary took a loan of $4100 at the rate of 7% simple interest per annum. If he paid an amount of $6683 to clear the loan, then find the time period of the loan.
(9) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7498 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 8 years.