Question:
Find the amount to be paid if Sarah borrowed a sum of $5850 at 4% simple interest for 7 years.
Correct Answer
$7488
Solution And Explanation
Solution
Given,
Principal (P) = $5850
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) = $5850 × 4% × 7
= $5850 ×4/100 × 7
= 5850 × 4 × 7/100
= 23400 × 7/100
= 163800/100
= $1638
Thus, Simple Interest = $1638
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 = $5850 + $1638
= $7488
Thus, Amount to be paid = $7488 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 = $5850
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 7 years
Thus, Amount (A)
= $5850 + ($5850 × 4% × 7)
= $5850 + ($5850 ×4/100 × 7)
= $5850 + (5850 × 4 × 7/100)
= $5850 + (23400 × 7/100)
= $5850 + (163800/100)
= $5850 + $1638 = $7488
Thus, Amount (A) to be paid = $7488 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 $5850, the simple interest in 1 year
= 4/100 × 5850
= 4 × 5850/100
= 23400/100 = $234
Thus, simple interest for 1 year = $234
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $234 × 7 = $1638
Thus, Simple Interest (SI) = $1638
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5850 + $1638
= $7488
Thus, Amount to be paid = $7488 Answer
Similar Questions
(1) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(2) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9048 to clear the loan, then find the time period of the loan.
(3) How much loan did Andrew borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8500 to clear it?
(4) Susan had to pay $4197.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 7 years.
(6) If Christopher borrowed $4000 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(7) In how much time a principal of $3150 will amount to $3780 at a simple interest of 5% per annum?
(8) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 3% simple interest?
(9) If William paid $3780 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(10) Calculate the amount due if Joseph borrowed a sum of $3700 at 6% simple interest for 3 years.