Question:
Find the amount to be paid if William borrowed a sum of $5500 at 4% simple interest for 7 years.
Correct Answer
$7040
Solution And Explanation
Solution
Given,
Principal (P) = $5500
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) = $5500 × 4% × 7
= $5500 ×4/100 × 7
= 5500 × 4 × 7/100
= 22000 × 7/100
= 154000/100
= $1540
Thus, Simple Interest = $1540
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 = $5500 + $1540
= $7040
Thus, Amount to be paid = $7040 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 = $5500
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5500 + ($5500 × 4% × 7)
= $5500 + ($5500 ×4/100 × 7)
= $5500 + (5500 × 4 × 7/100)
= $5500 + (22000 × 7/100)
= $5500 + (154000/100)
= $5500 + $1540 = $7040
Thus, Amount (A) to be paid = $7040 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 $5500, the simple interest in 1 year
= 4/100 × 5500
= 4 × 5500/100
= 22000/100 = $220
Thus, simple interest for 1 year = $220
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $220 × 7 = $1540
Thus, Simple Interest (SI) = $1540
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5500 + $1540
= $7040
Thus, Amount to be paid = $7040 Answer
Similar Questions
(1) Calculate the amount due if Robert borrowed a sum of $3100 at 5% simple interest for 3 years.
(2) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 6% simple interest for 4 years.
(3) Michael took a loan of $4600 at the rate of 7% simple interest per annum. If he paid an amount of $7176 to clear the loan, then find the time period of the loan.
(4) How much loan did Barbara borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6660 to clear it?
(5) What amount does David have to pay after 6 years if he takes a loan of $3400 at 8% simple interest?
(6) Calculate the amount due if Mary borrowed a sum of $3050 at 5% simple interest for 4 years.
(7) In how much time a principal of $3000 will amount to $3120 at a simple interest of 2% per annum?
(8) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $6816 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Robert borrowed a sum of $5100 at 5% simple interest for 8 years.
(10) What amount will be due after 2 years if John borrowed a sum of $3100 at a 6% simple interest?