Question:
Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 2% simple interest.
Correct Answer
$6480
Solution And Explanation
Solution
Given,
Principal (P) = $5400
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) = $5400 × 2% × 10
= $5400 ×2/100 × 10
= 5400 × 2 × 10/100
= 10800 × 10/100
= 108000/100
= $1080
Thus, Simple Interest = $1080
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 = $5400 + $1080
= $6480
Thus, Amount to be paid = $6480 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 = $5400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 10 years
Thus, Amount (A)
= $5400 + ($5400 × 2% × 10)
= $5400 + ($5400 ×2/100 × 10)
= $5400 + (5400 × 2 × 10/100)
= $5400 + (10800 × 10/100)
= $5400 + (108000/100)
= $5400 + $1080 = $6480
Thus, Amount (A) to be paid = $6480 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 $5400, the simple interest in 1 year
= 2/100 × 5400
= 2 × 5400/100
= 10800/100 = $108
Thus, simple interest for 1 year = $108
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $108 × 10 = $1080
Thus, Simple Interest (SI) = $1080
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5400 + $1080
= $6480
Thus, Amount to be paid = $6480 Answer
Similar Questions
(1) Michael had to pay $3696 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) If Paul paid $5264 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) How much loan did Michael borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6095 to clear it?
(5) Find the amount to be paid if David borrowed a sum of $5400 at 9% simple interest for 8 years.
(6) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 4% simple interest?
(7) Find the amount to be paid if Robert borrowed a sum of $5100 at 10% simple interest for 7 years.
(8) Calculate the amount due if David borrowed a sum of $3400 at 10% simple interest for 3 years.
(9) Elizabeth took a loan of $4900 at the rate of 7% simple interest per annum. If he paid an amount of $8330 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if David borrowed a sum of $5400 at 6% simple interest for 8 years.