Question:
What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 8% simple interest?
Correct Answer
$4524
Solution And Explanation
Solution
Given,
Principal (P) = $3900
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) = $3900 × 8% × 2
= $3900 ×8/100 × 2
= 3900 × 8 × 2/100
= 31200 × 2/100
= 62400/100
= $624
Thus, Simple Interest = $624
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 = $3900 + $624
= $4524
Thus, Amount to be paid = $4524 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 = $3900
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 2 years
Thus, Amount (A)
= $3900 + ($3900 × 8% × 2)
= $3900 + ($3900 ×8/100 × 2)
= $3900 + (3900 × 8 × 2/100)
= $3900 + (31200 × 2/100)
= $3900 + (62400/100)
= $3900 + $624 = $4524
Thus, Amount (A) to be paid = $4524 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 $3900, the simple interest in 1 year
= 8/100 × 3900
= 8 × 3900/100
= 31200/100 = $312
Thus, simple interest for 1 year = $312
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $312 × 2 = $624
Thus, Simple Interest (SI) = $624
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3900 + $624
= $4524
Thus, Amount to be paid = $4524 Answer
Similar Questions
(1) Calculate the amount due if Karen borrowed a sum of $3950 at 5% simple interest for 3 years.
(2) Mary took a loan of $4100 at the rate of 9% simple interest per annum. If he paid an amount of $6314 to clear the loan, then find the time period of the loan.
(3) Matthew took a loan of $6400 at the rate of 9% simple interest per annum. If he paid an amount of $11584 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Sarah borrowed a sum of $5850 at 5% simple interest for 8 years.
(5) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 7% simple interest.
(6) Robert took a loan of $4200 at the rate of 9% simple interest per annum. If he paid an amount of $7980 to clear the loan, then find the time period of the loan.
(7) Richard took a loan of $5200 at the rate of 6% simple interest per annum. If he paid an amount of $8320 to clear the loan, then find the time period of the loan.
(8) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6812.5 to clear it?
(9) Calculate the amount due if Jennifer borrowed a sum of $3250 at 2% simple interest for 4 years.
(10) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 4% simple interest?