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) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 8% simple interest for 4 years.
(2) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 8% simple interest?
(3) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 5% simple interest?
(4) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 7% simple interest.
(5) Calculate the amount due if Thomas borrowed a sum of $3800 at 3% simple interest for 4 years.
(6) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 4% simple interest.
(7) How much loan did William borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6875 to clear it?
(8) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $8662 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Patricia borrowed a sum of $3150 at 5% simple interest for 3 years.
(10) What amount does John have to pay after 6 years if he takes a loan of $3200 at 8% simple interest?