Question:
Find the amount to be paid if Karen borrowed a sum of $5950 at 3% simple interest for 7 years.
Correct Answer
$7199.5
Solution And Explanation
Solution
Given,
Principal (P) = $5950
Rate of Simple Interest (SI) = 3%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 3% simple interest means, Rate of Simple Interest (SI) is 3% 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 × 3% × 7
= $5950 ×3/100 × 7
= 5950 × 3 × 7/100
= 17850 × 7/100
= 124950/100
= $1249.5
Thus, Simple Interest = $1249.5
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 + $1249.5
= $7199.5
Thus, Amount to be paid = $7199.5 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) = 3%
And, Time (t) = 7 years
Thus, Amount (A)
= $5950 + ($5950 × 3% × 7)
= $5950 + ($5950 ×3/100 × 7)
= $5950 + (5950 × 3 × 7/100)
= $5950 + (17850 × 7/100)
= $5950 + (124950/100)
= $5950 + $1249.5 = $7199.5
Thus, Amount (A) to be paid = $7199.5 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 3%
This, means, $3 per $100 per year
∵ For $100, the simple interest for 1 year = $3
∴ For $1, the simple interest for 1 year = 3/100
∴ For $5950, the simple interest in 1 year
= 3/100 × 5950
= 3 × 5950/100
= 17850/100 = $178.5
Thus, simple interest for 1 year = $178.5
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $178.5 × 7 = $1249.5
Thus, Simple Interest (SI) = $1249.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $1249.5
= $7199.5
Thus, Amount to be paid = $7199.5 Answer
Similar Questions
(1) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
(2) Joseph had to pay $3922 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(3) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(4) In how much time a principal of $3200 will amount to $3520 at a simple interest of 5% per annum?
(5) Susan had to pay $3869 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(6) William took a loan of $5000 at the rate of 6% simple interest per annum. If he paid an amount of $8000 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 6% simple interest.
(8) Anthony had to pay $4687 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) How much loan did Daniel borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7320 to clear it?
(10) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 5% simple interest?