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) If Donald paid $5400 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Calculate the amount due if Christopher borrowed a sum of $4000 at 6% simple interest for 3 years.
(3) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.
(4) William took a loan of $5000 at the rate of 9% simple interest per annum. If he paid an amount of $7700 to clear the loan, then find the time period of the loan.
(5) In how much time a principal of $3150 will amount to $3622.5 at a simple interest of 3% per annum?
(6) What amount will be due after 2 years if John borrowed a sum of $3100 at a 4% simple interest?
(7) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7176 to clear the loan, then find the time period of the loan.
(8) How much loan did Jennifer borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5775 to clear it?
(9) Calculate the amount due if Thomas borrowed a sum of $3800 at 8% simple interest for 4 years.
(10) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 10% simple interest.