Question:
Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
Correct Answer
$7000
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 4%
Time (t) = 10 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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 × 4% × 10
= $5000 ×4/100 × 10
= 5000 × 4 × 10/100
= 20000 × 10/100
= 200000/100
= $2000
Thus, Simple Interest = $2000
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 + $2000
= $7000
Thus, Amount to be paid = $7000 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) = 4%
And, Time (t) = 10 years
Thus, Amount (A)
= $5000 + ($5000 × 4% × 10)
= $5000 + ($5000 ×4/100 × 10)
= $5000 + (5000 × 4 × 10/100)
= $5000 + (20000 × 10/100)
= $5000 + (200000/100)
= $5000 + $2000 = $7000
Thus, Amount (A) to be paid = $7000 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $5000, the simple interest in 1 year
= 4/100 × 5000
= 4 × 5000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $200 × 10 = $2000
Thus, Simple Interest (SI) = $2000
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2000
= $7000
Thus, Amount to be paid = $7000 Answer
Similar Questions
(1) Elizabeth had to pay $3864 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Calculate the amount due if Jessica borrowed a sum of $3750 at 9% simple interest for 3 years.
(3) Anthony had to pay $4687 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(4) Linda took a loan of $4700 at the rate of 6% simple interest per annum. If he paid an amount of $7238 to clear the loan, then find the time period of the loan.
(5) If James paid $3240 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6556 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 7% simple interest.
(8) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $10830 to clear the loan, then find the time period of the loan.
(9) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 6% simple interest?
(10) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $9291 to clear the loan, then find the time period of the loan.