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) Daniel took a loan of $6200 at the rate of 8% simple interest per annum. If he paid an amount of $10168 to clear the loan, then find the time period of the loan.
(2) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8424 to clear the loan, then find the time period of the loan.
(3) How much loan did Ryan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9480 to clear it?
(4) How much loan did Jacob borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8800 to clear it?
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 5% simple interest for 4 years.
(6) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 10% simple interest?
(7) If Steven paid $5520 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $10070 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 2% simple interest.
(10) Find the amount to be paid if Michael borrowed a sum of $5300 at 9% simple interest for 7 years.