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) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $13800 to clear the loan, then find the time period of the loan.
(2) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $8740 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if David borrowed a sum of $3400 at 2% simple interest for 3 years.
(4) Find the amount to be paid if John borrowed a sum of $5200 at 7% simple interest for 7 years.
(5) How much loan did Barbara borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6382.5 to clear it?
(6) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 4% simple interest?
(7) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 4% simple interest?
(8) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 6% simple interest?
(9) What amount will be due after 2 years if William borrowed a sum of $3250 at a 9% simple interest?
(10) Find the amount to be paid if Joseph borrowed a sum of $5700 at 4% simple interest for 7 years.