Question:
Find the amount to be paid if James borrowed a sum of $5000 at 6% simple interest for 7 years.
Correct Answer
$7100
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 6%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 6% simple interest means, Rate of Simple Interest (SI) is 6% 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 × 6% × 7
= $5000 ×6/100 × 7
= 5000 × 6 × 7/100
= 30000 × 7/100
= 210000/100
= $2100
Thus, Simple Interest = $2100
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 + $2100
= $7100
Thus, Amount to be paid = $7100 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) = 6%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 6% × 7)
= $5000 + ($5000 ×6/100 × 7)
= $5000 + (5000 × 6 × 7/100)
= $5000 + (30000 × 7/100)
= $5000 + (210000/100)
= $5000 + $2100 = $7100
Thus, Amount (A) to be paid = $7100 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 6%
This, means, $6 per $100 per year
∵ For $100, the simple interest for 1 year = $6
∴ For $1, the simple interest for 1 year = 6/100
∴ For $5000, the simple interest in 1 year
= 6/100 × 5000
= 6 × 5000/100
= 30000/100 = $300
Thus, simple interest for 1 year = $300
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $300 × 7 = $2100
Thus, Simple Interest (SI) = $2100
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2100
= $7100
Thus, Amount to be paid = $7100 Answer
Similar Questions
(1) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 4% simple interest?
(2) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $12670 to clear the loan, then find the time period of the loan.
(3) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7920 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Patricia borrowed a sum of $3150 at 10% simple interest for 3 years.
(5) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6120 to clear the loan, then find the time period of the loan.
(6) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 7% simple interest?
(7) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 4% simple interest.
(8) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $13110 to clear the loan, then find the time period of the loan.
(9) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 2% simple interest?
(10) Calculate the amount due if John borrowed a sum of $3200 at 3% simple interest for 3 years.