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) If Anthony paid $4644 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(2) Susan took a loan of $5300 at the rate of 8% simple interest per annum. If he paid an amount of $9116 to clear the loan, then find the time period of the loan.
(3) Susan took a loan of $5300 at the rate of 10% simple interest per annum. If he paid an amount of $9010 to clear the loan, then find the time period of the loan.
(4) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 3% simple interest?
(5) Calculate the amount due if Karen borrowed a sum of $3950 at 9% simple interest for 4 years.
(6) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 4 years.
(7) In how much time a principal of $3000 will amount to $3180 at a simple interest of 2% per annum?
(8) Anthony took a loan of $6600 at the rate of 10% simple interest per annum. If he paid an amount of $11880 to clear the loan, then find the time period of the loan.
(9) How much loan did Matthew borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7440 to clear it?
(10) In how much time a principal of $3200 will amount to $3488 at a simple interest of 3% per annum?