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) What amount does William have to pay after 5 years if he takes a loan of $3500 at 7% simple interest?
(2) If David paid $3672 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(3) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 9% simple interest.
(4) How much loan did Barbara borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6105 to clear it?
(5) Calculate the amount due if William borrowed a sum of $3500 at 2% simple interest for 3 years.
(6) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 8 years.
(7) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 3% simple interest.
(8) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $7335 to clear the loan, then find the time period of the loan.
(9) Betty took a loan of $6500 at the rate of 8% simple interest per annum. If he paid an amount of $10660 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Karen borrowed a sum of $5950 at 10% simple interest for 8 years.