Question:
What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 8% simple interest?
Correct Answer
$4466
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 8% × 2
= $3850 ×8/100 × 2
= 3850 × 8 × 2/100
= 30800 × 2/100
= 61600/100
= $616
Thus, Simple Interest = $616
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 = $3850 + $616
= $4466
Thus, Amount to be paid = $4466 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 = $3850
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 2 years
Thus, Amount (A)
= $3850 + ($3850 × 8% × 2)
= $3850 + ($3850 ×8/100 × 2)
= $3850 + (3850 × 8 × 2/100)
= $3850 + (30800 × 2/100)
= $3850 + (61600/100)
= $3850 + $616 = $4466
Thus, Amount (A) to be paid = $4466 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 $3850, the simple interest in 1 year
= 8/100 × 3850
= 8 × 3850/100
= 30800/100 = $308
Thus, simple interest for 1 year = $308
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $308 × 2 = $616
Thus, Simple Interest (SI) = $616
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $616
= $4466
Thus, Amount to be paid = $4466 Answer
Similar Questions
(1) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 9% simple interest?
(2) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Thomas borrowed a sum of $5800 at 3% simple interest for 8 years.
(4) In how much time a principal of $3050 will amount to $3660 at a simple interest of 4% per annum?
(5) Calculate the amount due if James borrowed a sum of $3000 at 2% simple interest for 3 years.
(6) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $11340 to clear the loan, then find the time period of the loan.
(7) Mark took a loan of $6800 at the rate of 8% simple interest per annum. If he paid an amount of $12240 to clear the loan, then find the time period of the loan.
(8) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $8364 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 10% simple interest.
(10) How much loan did Cynthia borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8745 to clear it?