Question:
Find the amount to be paid if John borrowed a sum of $5200 at 4% simple interest for 7 years.
Correct Answer
$6656
Solution And Explanation
Solution
Given,
Principal (P) = $5200
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) = $5200 × 4% × 7
= $5200 ×4/100 × 7
= 5200 × 4 × 7/100
= 20800 × 7/100
= 145600/100
= $1456
Thus, Simple Interest = $1456
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 = $5200 + $1456
= $6656
Thus, Amount to be paid = $6656 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 = $5200
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5200 + ($5200 × 4% × 7)
= $5200 + ($5200 ×4/100 × 7)
= $5200 + (5200 × 4 × 7/100)
= $5200 + (20800 × 7/100)
= $5200 + (145600/100)
= $5200 + $1456 = $6656
Thus, Amount (A) to be paid = $6656 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 $5200, the simple interest in 1 year
= 4/100 × 5200
= 4 × 5200/100
= 20800/100 = $208
Thus, simple interest for 1 year = $208
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $208 × 7 = $1456
Thus, Simple Interest (SI) = $1456
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5200 + $1456
= $6656
Thus, Amount to be paid = $6656 Answer
Similar Questions
(1) 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.
(2) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 8% simple interest?
(3) Calculate the amount due if Michael borrowed a sum of $3300 at 8% simple interest for 3 years.
(4) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 9% simple interest.
(5) If Paul paid $5076 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $14000 to clear the loan, then find the time period of the loan.
(7) Christopher had to pay $4240 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 5% simple interest.
(9) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $6392 to clear the loan, then find the time period of the loan.
(10) How much loan did John borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5720 to clear it?