Question:
Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 5% simple interest.
Correct Answer
$7500
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 5%
Time (t) = 10 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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 × 5% × 10
= $5000 ×5/100 × 10
= 5000 × 5 × 10/100
= 25000 × 10/100
= 250000/100
= $2500
Thus, Simple Interest = $2500
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 + $2500
= $7500
Thus, Amount to be paid = $7500 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) = 5%
And, Time (t) = 10 years
Thus, Amount (A)
= $5000 + ($5000 × 5% × 10)
= $5000 + ($5000 ×5/100 × 10)
= $5000 + (5000 × 5 × 10/100)
= $5000 + (25000 × 10/100)
= $5000 + (250000/100)
= $5000 + $2500 = $7500
Thus, Amount (A) to be paid = $7500 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $5000, the simple interest in 1 year
= 5/100 × 5000
= 5 × 5000/100
= 25000/100 = $250
Thus, simple interest for 1 year = $250
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $250 × 10 = $2500
Thus, Simple Interest (SI) = $2500
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2500
= $7500
Thus, Amount to be paid = $7500 Answer
Similar Questions
(1) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 3% simple interest?
(2) Calculate the amount due after 10 years if Linda borrowed a sum of $5350 at a rate of 2% simple interest.
(3) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 5% simple interest?
(4) Find the amount to be paid if John borrowed a sum of $5200 at 7% simple interest for 7 years.
(5) Patricia took a loan of $4300 at the rate of 9% simple interest per annum. If he paid an amount of $7009 to clear the loan, then find the time period of the loan.
(6) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 3% simple interest?
(7) Calculate the amount due if Jessica borrowed a sum of $3750 at 5% simple interest for 4 years.
(8) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
(9) Calculate the amount due if Barbara borrowed a sum of $3550 at 6% simple interest for 4 years.
(10) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $10136 to clear the loan, then find the time period of the loan.