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 does Jessica have to pay after 5 years if he takes a loan of $3750 at 9% simple interest?
(2) Betty took a loan of $6500 at the rate of 6% simple interest per annum. If he paid an amount of $8840 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Richard borrowed a sum of $3600 at 6% simple interest for 4 years.
(4) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $9240 to clear the loan, then find the time period of the loan.
(5) Linda had to pay $3752 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) If Betty paid $5100 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) Find the amount to be paid if David borrowed a sum of $5400 at 10% simple interest for 7 years.
(8) Find the amount to be paid if Robert borrowed a sum of $5100 at 6% simple interest for 7 years.
(9) If Barbara borrowed $3550 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(10) If Robert paid $3596 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.