Question:
Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 2% simple interest.
Correct Answer
$6000
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 2%
Time (t) = 10 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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 × 2% × 10
= $5000 ×2/100 × 10
= 5000 × 2 × 10/100
= 10000 × 10/100
= 100000/100
= $1000
Thus, Simple Interest = $1000
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 + $1000
= $6000
Thus, Amount to be paid = $6000 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) = 2%
And, Time (t) = 10 years
Thus, Amount (A)
= $5000 + ($5000 × 2% × 10)
= $5000 + ($5000 ×2/100 × 10)
= $5000 + (5000 × 2 × 10/100)
= $5000 + (10000 × 10/100)
= $5000 + (100000/100)
= $5000 + $1000 = $6000
Thus, Amount (A) to be paid = $6000 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $5000, the simple interest in 1 year
= 2/100 × 5000
= 2 × 5000/100
= 10000/100 = $100
Thus, simple interest for 1 year = $100
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $100 × 10 = $1000
Thus, Simple Interest (SI) = $1000
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $1000
= $6000
Thus, Amount to be paid = $6000 Answer
Similar Questions
(1) What amount does David have to pay after 6 years if he takes a loan of $3400 at 4% simple interest?
(2) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 7% simple interest.
(3) Find the amount to be paid if Joseph borrowed a sum of $5700 at 10% simple interest for 8 years.
(4) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $7790 to clear the loan, then find the time period of the loan.
(5) How much loan did James borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6250 to clear it?
(6) Calculate the amount due if Sarah borrowed a sum of $3850 at 5% simple interest for 4 years.
(7) Find the amount to be paid if Karen borrowed a sum of $5950 at 6% simple interest for 7 years.
(8) If Kenneth paid $5400 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(9) If Mary borrowed $3050 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(10) If John paid $3456 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.