Question:
Find the amount to be paid if Jennifer borrowed a sum of $5250 at 5% simple interest for 7 years.
Correct Answer
$7087.5
Solution And Explanation
Solution
Given,
Principal (P) = $5250
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) = $5250 × 5% × 7
= $5250 ×5/100 × 7
= 5250 × 5 × 7/100
= 26250 × 7/100
= 183750/100
= $1837.5
Thus, Simple Interest = $1837.5
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 = $5250 + $1837.5
= $7087.5
Thus, Amount to be paid = $7087.5 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 = $5250
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 7 years
Thus, Amount (A)
= $5250 + ($5250 × 5% × 7)
= $5250 + ($5250 ×5/100 × 7)
= $5250 + (5250 × 5 × 7/100)
= $5250 + (26250 × 7/100)
= $5250 + (183750/100)
= $5250 + $1837.5 = $7087.5
Thus, Amount (A) to be paid = $7087.5 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 $5250, the simple interest in 1 year
= 5/100 × 5250
= 5 × 5250/100
= 26250/100 = $262.5
Thus, simple interest for 1 year = $262.5
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $262.5 × 7 = $1837.5
Thus, Simple Interest (SI) = $1837.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5250 + $1837.5
= $7087.5
Thus, Amount to be paid = $7087.5 Answer
Similar Questions
(1) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 2% simple interest.
(2) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $10980 to clear the loan, then find the time period of the loan.
(3) Michelle had to pay $5544 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) Calculate the amount due if William borrowed a sum of $3500 at 6% simple interest for 3 years.
(5) Robert took a loan of $4200 at the rate of 10% simple interest per annum. If he paid an amount of $6720 to clear the loan, then find the time period of the loan.
(6) Jessica took a loan of $5500 at the rate of 6% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(7) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.
(8) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 10% simple interest?
(9) Christopher took a loan of $6000 at the rate of 10% simple interest per annum. If he paid an amount of $11400 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 10% simple interest.