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) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 3% simple interest for 8 years.
(2) Calculate the amount due if Charles borrowed a sum of $3900 at 6% simple interest for 4 years.
(3) What amount does David have to pay after 5 years if he takes a loan of $3400 at 5% simple interest?
(4) Matthew took a loan of $6400 at the rate of 7% simple interest per annum. If he paid an amount of $10432 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 9% simple interest.
(6) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(7) If Donna paid $5626 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 7% simple interest?
(9) Find the amount to be paid if Mary borrowed a sum of $5050 at 4% simple interest for 8 years.
(10) How much loan did Mark borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8000 to clear it?