Question:
What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 8% simple interest?
Correct Answer
$4640
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 8% × 2
= $4000 ×8/100 × 2
= 4000 × 8 × 2/100
= 32000 × 2/100
= 64000/100
= $640
Thus, Simple Interest = $640
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 = $4000 + $640
= $4640
Thus, Amount to be paid = $4640 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 = $4000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 2 years
Thus, Amount (A)
= $4000 + ($4000 × 8% × 2)
= $4000 + ($4000 ×8/100 × 2)
= $4000 + (4000 × 8 × 2/100)
= $4000 + (32000 × 2/100)
= $4000 + (64000/100)
= $4000 + $640 = $4640
Thus, Amount (A) to be paid = $4640 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 $4000, the simple interest in 1 year
= 8/100 × 4000
= 8 × 4000/100
= 32000/100 = $320
Thus, simple interest for 1 year = $320
Therefore, simple interest for 2 years
= Simple interest for 1 year × 2
= $320 × 2 = $640
Thus, Simple Interest (SI) = $640
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $640
= $4640
Thus, Amount to be paid = $4640 Answer
Similar Questions
(1) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $12350 to clear the loan, then find the time period of the loan.
(2) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $13400 to clear the loan, then find the time period of the loan.
(3) Kenneth had to pay $5750 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(4) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 9% simple interest?
(5) If Daniel paid $4756 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Calculate the amount due if James borrowed a sum of $3000 at 2% simple interest for 4 years.
(7) Find the amount to be paid if Thomas borrowed a sum of $5800 at 10% simple interest for 8 years.
(8) In how much time a principal of $3100 will amount to $3472 at a simple interest of 4% per annum?
(9) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 3% simple interest?
(10) Calculate the amount due if Susan borrowed a sum of $3650 at 8% simple interest for 4 years.