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) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 8% simple interest?
(2) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 5% simple interest?
(3) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 8% simple interest?
(4) In how much time a principal of $3050 will amount to $3660 at a simple interest of 4% per annum?
(5) If Michelle paid $5940 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(6) What amount does Barbara have to pay after 6 years if he takes a loan of $3550 at 6% simple interest?
(7) How much loan did Andrew borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8160 to clear it?
(8) Calculate the amount due if Sarah borrowed a sum of $3850 at 3% simple interest for 4 years.
(9) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 4% simple interest.
(10) Karen took a loan of $5900 at the rate of 9% simple interest per annum. If he paid an amount of $11210 to clear the loan, then find the time period of the loan.