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) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 5% simple interest.
(2) If Betty paid $4930 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(3) If Margaret paid $5220 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 8% simple interest.
(5) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 6% simple interest?
(6) Steven had to pay $5152 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(7) In how much time a principal of $3200 will amount to $3456 at a simple interest of 4% per annum?
(8) Michelle had to pay $5395.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $7052 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Joseph borrowed a sum of $3700 at 4% simple interest for 3 years.