Question:
What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 8% simple interest?
Correct Answer
$3654
Solution And Explanation
Solution
Given,
Principal (P) = $3150
Rate of Simple Interest (SI) = 8%
Time (t) = 2 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% 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) = $3150 × 8% × 2
= $3150 ×8/100 × 2
= 3150 × 8 × 2/100
= 25200 × 2/100
= 50400/100
= $504
Thus, Simple Interest = $504
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 = $3150 + $504
= $3654
Thus, Amount to be paid = $3654 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 = $3150
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 2 years
Thus, Amount (A)
= $3150 + ($3150 × 8% × 2)
= $3150 + ($3150 ×8/100 × 2)
= $3150 + (3150 × 8 × 2/100)
= $3150 + (25200 × 2/100)
= $3150 + (50400/100)
= $3150 + $504 = $3654
Thus, Amount (A) to be paid = $3654 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $3150, the simple interest in 1 year
= 8/100 × 3150
= 8 × 3150/100
= 25200/100 = $252
Thus, simple interest for 1 year = $252
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $252 × 2 = $504
Thus, Simple Interest (SI) = $504
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3150 + $504
= $3654
Thus, Amount to be paid = $3654 Answer
Similar Questions
(1) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7661 to clear the loan, then find the time period of the loan.
(2) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 6% simple interest?
(3) If Thomas borrowed $3800 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(4) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 3 years.
(5) Christopher had to pay $4240 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(6) What amount will be due after 2 years if David borrowed a sum of $3200 at a 10% simple interest?
(7) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 6% simple interest?
(8) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 4% simple interest?
(9) Find the amount to be paid if Sarah borrowed a sum of $5850 at 9% simple interest for 8 years.
(10) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $11696 to clear the loan, then find the time period of the loan.