Question:
Calculate the amount due if Sarah borrowed a sum of $3850 at 8% simple interest for 3 years.
Correct Answer
$4774
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 8% × 3
= $3850 ×8/100 × 3
= 3850 × 8 × 3/100
= 30800 × 3/100
= 92400/100
= $924
Thus, Simple Interest = $924
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 = $3850 + $924
= $4774
Thus, Amount to be paid = $4774 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 = $3850
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 3 years
Thus, Amount (A)
= $3850 + ($3850 × 8% × 3)
= $3850 + ($3850 ×8/100 × 3)
= $3850 + (3850 × 8 × 3/100)
= $3850 + (30800 × 3/100)
= $3850 + (92400/100)
= $3850 + $924 = $4774
Thus, Amount (A) to be paid = $4774 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 $3850, the simple interest in 1 year
= 8/100 × 3850
= 8 × 3850/100
= 30800/100 = $308
Thus, simple interest for 1 year = $308
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $308 × 3 = $924
Thus, Simple Interest (SI) = $924
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $924
= $4774
Thus, Amount to be paid = $4774 Answer
Similar Questions
(1) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $10880 to clear the loan, then find the time period of the loan.
(2) William took a loan of $5000 at the rate of 10% simple interest per annum. If he paid an amount of $8500 to clear the loan, then find the time period of the loan.
(3) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 4% simple interest?
(4) Calculate the amount due if Jennifer borrowed a sum of $3250 at 10% simple interest for 3 years.
(5) Calculate the amount due if Robert borrowed a sum of $3100 at 8% simple interest for 3 years.
(6) What amount does Robert have to pay after 6 years if he takes a loan of $3100 at 10% simple interest?
(7) If Elizabeth paid $4140 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(8) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 4 years.
(9) Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 9 years if Barbara borrowed a sum of $5550 at a rate of 4% simple interest.