Question:
Find the amount to be paid if Sarah borrowed a sum of $5850 at 5% simple interest for 7 years.
Correct Answer
$7897.5
Solution And Explanation
Solution
Given,
Principal (P) = $5850
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) = $5850 × 5% × 7
= $5850 ×5/100 × 7
= 5850 × 5 × 7/100
= 29250 × 7/100
= 204750/100
= $2047.5
Thus, Simple Interest = $2047.5
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 = $5850 + $2047.5
= $7897.5
Thus, Amount to be paid = $7897.5 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 = $5850
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 7 years
Thus, Amount (A)
= $5850 + ($5850 × 5% × 7)
= $5850 + ($5850 ×5/100 × 7)
= $5850 + (5850 × 5 × 7/100)
= $5850 + (29250 × 7/100)
= $5850 + (204750/100)
= $5850 + $2047.5 = $7897.5
Thus, Amount (A) to be paid = $7897.5 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 $5850, the simple interest in 1 year
= 5/100 × 5850
= 5 × 5850/100
= 29250/100 = $292.5
Thus, simple interest for 1 year = $292.5
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $292.5 × 7 = $2047.5
Thus, Simple Interest (SI) = $2047.5
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5850 + $2047.5
= $7897.5
Thus, Amount to be paid = $7897.5 Answer
Similar Questions
(1) How much loan did Cynthia borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $9142.5 to clear it?
(2) David took a loan of $4800 at the rate of 9% simple interest per annum. If he paid an amount of $8688 to clear the loan, then find the time period of the loan.
(3) If Kimberly paid $5208 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 5% simple interest.
(5) If Margaret paid $4872 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) Betty took a loan of $6500 at the rate of 10% simple interest per annum. If he paid an amount of $10400 to clear the loan, then find the time period of the loan.
(7) William had to pay $3920 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(8) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $10070 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 7% simple interest.
(10) What amount does John have to pay after 6 years if he takes a loan of $3200 at 6% simple interest?