Question:
Calculate the amount due if Jessica borrowed a sum of $3750 at 8% simple interest for 3 years.
Correct Answer
$4650
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 8% × 3
= $3750 ×8/100 × 3
= 3750 × 8 × 3/100
= 30000 × 3/100
= 90000/100
= $900
Thus, Simple Interest = $900
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 = $3750 + $900
= $4650
Thus, Amount to be paid = $4650 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 = $3750
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 3 years
Thus, Amount (A)
= $3750 + ($3750 × 8% × 3)
= $3750 + ($3750 ×8/100 × 3)
= $3750 + (3750 × 8 × 3/100)
= $3750 + (30000 × 3/100)
= $3750 + (90000/100)
= $3750 + $900 = $4650
Thus, Amount (A) to be paid = $4650 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 $3750, the simple interest in 1 year
= 8/100 × 3750
= 8 × 3750/100
= 30000/100 = $300
Thus, simple interest for 1 year = $300
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $300 × 3 = $900
Thus, Simple Interest (SI) = $900
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $900
= $4650
Thus, Amount to be paid = $4650 Answer
Similar Questions
(1) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $9685 to clear the loan, then find the time period of the loan.
(2) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6556 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Sarah borrowed a sum of $3850 at 7% simple interest for 4 years.
(4) If Barbara borrowed $3550 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(5) Find the amount to be paid if Karen borrowed a sum of $5950 at 6% simple interest for 7 years.
(6) How much loan did Andrew borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8160 to clear it?
(7) If Karen borrowed $3950 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(8) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due if Richard borrowed a sum of $3600 at 2% simple interest for 4 years.
(10) John took a loan of $4400 at the rate of 6% simple interest per annum. If he paid an amount of $7040 to clear the loan, then find the time period of the loan.