Question:
Calculate the amount due if Joseph borrowed a sum of $3700 at 8% simple interest for 3 years.
Correct Answer
$4588
Solution And Explanation
Solution
Given,
Principal (P) = $3700
Rate of Simple Interest (SI) = 8%
Time (t) = 3 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) = $3700 × 8% × 3
= $3700 ×8/100 × 3
= 3700 × 8 × 3/100
= 29600 × 3/100
= 88800/100
= $888
Thus, Simple Interest = $888
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 = $3700 + $888
= $4588
Thus, Amount to be paid = $4588 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 = $3700
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 3 years
Thus, Amount (A)
= $3700 + ($3700 × 8% × 3)
= $3700 + ($3700 ×8/100 × 3)
= $3700 + (3700 × 8 × 3/100)
= $3700 + (29600 × 3/100)
= $3700 + (88800/100)
= $3700 + $888 = $4588
Thus, Amount (A) to be paid = $4588 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 $3700, the simple interest in 1 year
= 8/100 × 3700
= 8 × 3700/100
= 29600/100 = $296
Thus, simple interest for 1 year = $296
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $296 × 3 = $888
Thus, Simple Interest (SI) = $888
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $888
= $4588
Thus, Amount to be paid = $4588 Answer
Similar Questions
(1) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $9472 to clear the loan, then find the time period of the loan.
(2) In how much time a principal of $3200 will amount to $3456 at a simple interest of 4% per annum?
(3) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 9% simple interest?
(4) Charles took a loan of $5800 at the rate of 8% simple interest per annum. If he paid an amount of $9512 to clear the loan, then find the time period of the loan.
(5) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12920 to clear the loan, then find the time period of the loan.
(6) If Jennifer paid $3640 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 2% simple interest?
(8) Daniel took a loan of $6200 at the rate of 7% simple interest per annum. If he paid an amount of $10106 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Karen borrowed a sum of $5950 at 5% simple interest for 8 years.
(10) Find the amount to be paid if Barbara borrowed a sum of $5550 at 7% simple interest for 7 years.