Question:
Find the amount to be paid if James borrowed a sum of $5000 at 4% simple interest for 7 years.
Correct Answer
$6400
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 4%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $5000 × 4% × 7
= $5000 ×4/100 × 7
= 5000 × 4 × 7/100
= 20000 × 7/100
= 140000/100
= $1400
Thus, Simple Interest = $1400
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 = $5000 + $1400
= $6400
Thus, Amount to be paid = $6400 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 = $5000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 4% × 7)
= $5000 + ($5000 ×4/100 × 7)
= $5000 + (5000 × 4 × 7/100)
= $5000 + (20000 × 7/100)
= $5000 + (140000/100)
= $5000 + $1400 = $6400
Thus, Amount (A) to be paid = $6400 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $5000, the simple interest in 1 year
= 4/100 × 5000
= 4 × 5000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $200 × 7 = $1400
Thus, Simple Interest (SI) = $1400
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $1400
= $6400
Thus, Amount to be paid = $6400 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 8% simple interest.
(2) In how much time a principal of $3000 will amount to $3480 at a simple interest of 4% per annum?
(3) Find the amount to be paid if Mary borrowed a sum of $5050 at 9% simple interest for 8 years.
(4) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $12200 to clear the loan, then find the time period of the loan.
(5) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $9768 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 8 years.
(7) Christopher took a loan of $6000 at the rate of 9% simple interest per annum. If he paid an amount of $9240 to clear the loan, then find the time period of the loan.
(8) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 8% simple interest?
(9) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 6% simple interest?
(10) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 3% simple interest.