Question:
Find the amount to be paid if James borrowed a sum of $5000 at 7% simple interest for 7 years.
Correct Answer
$7450
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 7%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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 × 7% × 7
= $5000 ×7/100 × 7
= 5000 × 7 × 7/100
= 35000 × 7/100
= 245000/100
= $2450
Thus, Simple Interest = $2450
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 + $2450
= $7450
Thus, Amount to be paid = $7450 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) = 7%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 7% × 7)
= $5000 + ($5000 ×7/100 × 7)
= $5000 + (5000 × 7 × 7/100)
= $5000 + (35000 × 7/100)
= $5000 + (245000/100)
= $5000 + $2450 = $7450
Thus, Amount (A) to be paid = $7450 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $5000, the simple interest in 1 year
= 7/100 × 5000
= 7 × 5000/100
= 35000/100 = $350
Thus, simple interest for 1 year = $350
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $350 × 7 = $2450
Thus, Simple Interest (SI) = $2450
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2450
= $7450
Thus, Amount to be paid = $7450 Answer
Similar Questions
(1) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 9% simple interest?
(2) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $11000 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 10% simple interest.
(4) Find the amount to be paid if David borrowed a sum of $5400 at 10% simple interest for 7 years.
(5) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 4% simple interest?
(6) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(7) If Ashley paid $5096 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(8) If Barbara paid $4260 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(9) Donald took a loan of $7000 at the rate of 7% simple interest per annum. If he paid an amount of $10430 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 4% simple interest.