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) James had to pay $3360 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(3) Lisa took a loan of $6100 at the rate of 8% simple interest per annum. If he paid an amount of $9028 to clear the loan, then find the time period of the loan.
(4) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 2% simple interest?
(5) What amount will be due after 2 years if Richard borrowed a sum of $3300 at a 9% simple interest?
(6) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 4% simple interest.
(7) 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?
(8) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Sarah borrowed a sum of $3850 at 8% simple interest for 4 years.
(10) How much loan did Jessica borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6325 to clear it?