Question:
Find the amount to be paid if Michael borrowed a sum of $5300 at 4% simple interest for 7 years.
Correct Answer
$6784
Solution And Explanation
Solution
Given,
Principal (P) = $5300
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) = $5300 × 4% × 7
= $5300 ×4/100 × 7
= 5300 × 4 × 7/100
= 21200 × 7/100
= 148400/100
= $1484
Thus, Simple Interest = $1484
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 = $5300 + $1484
= $6784
Thus, Amount to be paid = $6784 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 = $5300
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5300 + ($5300 × 4% × 7)
= $5300 + ($5300 ×4/100 × 7)
= $5300 + (5300 × 4 × 7/100)
= $5300 + (21200 × 7/100)
= $5300 + (148400/100)
= $5300 + $1484 = $6784
Thus, Amount (A) to be paid = $6784 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 $5300, the simple interest in 1 year
= 4/100 × 5300
= 4 × 5300/100
= 21200/100 = $212
Thus, simple interest for 1 year = $212
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $212 × 7 = $1484
Thus, Simple Interest (SI) = $1484
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5300 + $1484
= $6784
Thus, Amount to be paid = $6784 Answer
Similar Questions
(1) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.
(2) In how much time a principal of $3050 will amount to $3660 at a simple interest of 4% per annum?
(3) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 5% simple interest?
(4) What amount does John have to pay after 5 years if he takes a loan of $3200 at 7% simple interest?
(5) Calculate the amount due if Jessica borrowed a sum of $3750 at 10% simple interest for 4 years.
(6) Patricia took a loan of $4300 at the rate of 7% simple interest per annum. If he paid an amount of $6106 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 7% simple interest?
(8) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 3% simple interest?
(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 5% simple interest for 8 years.
(10) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 9% simple interest.