Question:
Find the amount to be paid if Barbara borrowed a sum of $5550 at 4% simple interest for 7 years.
Correct Answer
$7104
Solution And Explanation
Solution
Given,
Principal (P) = $5550
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) = $5550 × 4% × 7
= $5550 ×4/100 × 7
= 5550 × 4 × 7/100
= 22200 × 7/100
= 155400/100
= $1554
Thus, Simple Interest = $1554
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 = $5550 + $1554
= $7104
Thus, Amount to be paid = $7104 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 = $5550
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5550 + ($5550 × 4% × 7)
= $5550 + ($5550 ×4/100 × 7)
= $5550 + (5550 × 4 × 7/100)
= $5550 + (22200 × 7/100)
= $5550 + (155400/100)
= $5550 + $1554 = $7104
Thus, Amount (A) to be paid = $7104 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 $5550, the simple interest in 1 year
= 4/100 × 5550
= 4 × 5550/100
= 22200/100 = $222
Thus, simple interest for 1 year = $222
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $222 × 7 = $1554
Thus, Simple Interest (SI) = $1554
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5550 + $1554
= $7104
Thus, Amount to be paid = $7104 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 4% simple interest.
(2) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8700 to clear it?
(3) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $10595 to clear the loan, then find the time period of the loan.
(4) Mark had to pay $4928 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(5) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(6) Barbara took a loan of $5100 at the rate of 9% simple interest per annum. If he paid an amount of $9690 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 4 years.
(8) Calculate the amount due if Joseph borrowed a sum of $3700 at 4% simple interest for 3 years.
(9) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 8% simple interest?
(10) Calculate the amount due if Sarah borrowed a sum of $3850 at 7% simple interest for 3 years.