Question:
Find the amount to be paid if David borrowed a sum of $5400 at 4% simple interest for 7 years.
Correct Answer
$6912
Solution And Explanation
Solution
Given,
Principal (P) = $5400
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) = $5400 × 4% × 7
= $5400 ×4/100 × 7
= 5400 × 4 × 7/100
= 21600 × 7/100
= 151200/100
= $1512
Thus, Simple Interest = $1512
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 = $5400 + $1512
= $6912
Thus, Amount to be paid = $6912 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 = $5400
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5400 + ($5400 × 4% × 7)
= $5400 + ($5400 ×4/100 × 7)
= $5400 + (5400 × 4 × 7/100)
= $5400 + (21600 × 7/100)
= $5400 + (151200/100)
= $5400 + $1512 = $6912
Thus, Amount (A) to be paid = $6912 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 $5400, the simple interest in 1 year
= 4/100 × 5400
= 4 × 5400/100
= 21600/100 = $216
Thus, simple interest for 1 year = $216
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $216 × 7 = $1512
Thus, Simple Interest (SI) = $1512
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5400 + $1512
= $6912
Thus, Amount to be paid = $6912 Answer
Similar Questions
(1) Calculate the amount due if Thomas borrowed a sum of $3800 at 3% simple interest for 3 years.
(2) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 9% simple interest.
(3) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 5% simple interest?
(4) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $7335 to clear the loan, then find the time period of the loan.
(5) If Robert borrowed $3100 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 8% simple interest for 7 years.
(7) Jennifer took a loan of $4500 at the rate of 7% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.
(8) What amount does William have to pay after 5 years if he takes a loan of $3500 at 2% simple interest?
(9) How much loan did Thomas borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6380 to clear it?
(10) In how much time a principal of $3000 will amount to $3180 at a simple interest of 3% per annum?