Question:
Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 7 years.
Correct Answer
$6720
Solution And Explanation
Solution
Given,
Principal (P) = $5250
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) = $5250 × 4% × 7
= $5250 ×4/100 × 7
= 5250 × 4 × 7/100
= 21000 × 7/100
= 147000/100
= $1470
Thus, Simple Interest = $1470
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 = $5250 + $1470
= $6720
Thus, Amount to be paid = $6720 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 = $5250
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5250 + ($5250 × 4% × 7)
= $5250 + ($5250 ×4/100 × 7)
= $5250 + (5250 × 4 × 7/100)
= $5250 + (21000 × 7/100)
= $5250 + (147000/100)
= $5250 + $1470 = $6720
Thus, Amount (A) to be paid = $6720 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 $5250, the simple interest in 1 year
= 4/100 × 5250
= 4 × 5250/100
= 21000/100 = $210
Thus, simple interest for 1 year = $210
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $210 × 7 = $1470
Thus, Simple Interest (SI) = $1470
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5250 + $1470
= $6720
Thus, Amount to be paid = $6720 Answer
Similar Questions
(1) Calculate the amount due if James borrowed a sum of $3000 at 3% simple interest for 4 years.
(2) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 5% simple interest?
(3) If Thomas borrowed $3800 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(4) Karen took a loan of $5900 at the rate of 7% simple interest per annum. If he paid an amount of $9204 to clear the loan, then find the time period of the loan.
(5) If Emily paid $5510 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(7) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 8% simple interest?
(8) Andrew had to pay $5088 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(9) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $9856 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Richard borrowed a sum of $5600 at 10% simple interest for 7 years.