Question:
Find the amount to be paid if James borrowed a sum of $5000 at 5% simple interest for 7 years.
Correct Answer
$6750
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 5%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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) = $5000 × 5% × 7
= $5000 ×5/100 × 7
= 5000 × 5 × 7/100
= 25000 × 7/100
= 175000/100
= $1750
Thus, Simple Interest = $1750
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 = $5000 + $1750
= $6750
Thus, Amount to be paid = $6750 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 = $5000
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 5% × 7)
= $5000 + ($5000 ×5/100 × 7)
= $5000 + (5000 × 5 × 7/100)
= $5000 + (25000 × 7/100)
= $5000 + (175000/100)
= $5000 + $1750 = $6750
Thus, Amount (A) to be paid = $6750 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $5000, the simple interest in 1 year
= 5/100 × 5000
= 5 × 5000/100
= 25000/100 = $250
Thus, simple interest for 1 year = $250
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $250 × 7 = $1750
Thus, Simple Interest (SI) = $1750
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $1750
= $6750
Thus, Amount to be paid = $6750 Answer
Similar Questions
(1) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6248 to clear the loan, then find the time period of the loan.
(2) If Susan paid $4380 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(3) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 8% simple interest for 7 years.
(4) What amount does James have to pay after 6 years if he takes a loan of $3000 at 4% simple interest?
(5) In how much time a principal of $3100 will amount to $3348 at a simple interest of 2% per annum?
(6) Calculate the amount due if Linda borrowed a sum of $3350 at 8% simple interest for 3 years.
(7) Kimberly had to pay $4929 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(8) If Elizabeth paid $3726 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 10% simple interest.
(10) Lisa took a loan of $6100 at the rate of 8% simple interest per annum. If he paid an amount of $10004 to clear the loan, then find the time period of the loan.