Question:
Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
Correct Answer
$6720
Solution And Explanation
Solution
Given,
Principal (P) = $5600
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) = $5600 × 2% × 10
= $5600 ×2/100 × 10
= 5600 × 2 × 10/100
= 11200 × 10/100
= 112000/100
= $1120
Thus, Simple Interest = $1120
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 = $5600 + $1120
= $6720
Thus, Amount to be paid = $6720 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 = $5600
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 10 years
Thus, Amount (A)
= $5600 + ($5600 × 2% × 10)
= $5600 + ($5600 ×2/100 × 10)
= $5600 + (5600 × 2 × 10/100)
= $5600 + (11200 × 10/100)
= $5600 + (112000/100)
= $5600 + $1120 = $6720
Thus, Amount (A) to be paid = $6720 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 $5600, the simple interest in 1 year
= 2/100 × 5600
= 2 × 5600/100
= 11200/100 = $112
Thus, simple interest for 1 year = $112
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $112 × 10 = $1120
Thus, Simple Interest (SI) = $1120
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5600 + $1120
= $6720
Thus, Amount to be paid = $6720 Answer
Similar Questions
(1) Sandra took a loan of $6900 at the rate of 8% simple interest per annum. If he paid an amount of $10764 to clear the loan, then find the time period of the loan.
(2) How much loan did Nancy borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7687.5 to clear it?
(3) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Karen borrowed a sum of $3950 at 4% simple interest for 3 years.
(5) Calculate the amount due if Mary borrowed a sum of $3050 at 2% simple interest for 4 years.
(6) David took a loan of $4800 at the rate of 8% simple interest per annum. If he paid an amount of $8640 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 10% simple interest for 4 years.
(8) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 7% simple interest?
(9) Calculate the amount due if Charles borrowed a sum of $3900 at 7% simple interest for 4 years.
(10) Find the amount to be paid if William borrowed a sum of $5500 at 5% simple interest for 7 years.