Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 3 years.
Correct Answer
$4898
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 8% × 3
= $3950 ×8/100 × 3
= 3950 × 8 × 3/100
= 31600 × 3/100
= 94800/100
= $948
Thus, Simple Interest = $948
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 = $3950 + $948
= $4898
Thus, Amount to be paid = $4898 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 = $3950
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 3 years
Thus, Amount (A)
= $3950 + ($3950 × 8% × 3)
= $3950 + ($3950 ×8/100 × 3)
= $3950 + (3950 × 8 × 3/100)
= $3950 + (31600 × 3/100)
= $3950 + (94800/100)
= $3950 + $948 = $4898
Thus, Amount (A) to be paid = $4898 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 $3950, the simple interest in 1 year
= 8/100 × 3950
= 8 × 3950/100
= 31600/100 = $316
Thus, simple interest for 1 year = $316
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $316 × 3 = $948
Thus, Simple Interest (SI) = $948
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $948
= $4898
Thus, Amount to be paid = $4898 Answer
Similar Questions
(1) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $8500 to clear the loan, then find the time period of the loan.
(2) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 7% simple interest?
(3) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Joseph borrowed a sum of $3700 at 7% simple interest for 4 years.
(5) Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 8 years.
(6) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 8% simple interest.
(7) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $6864 to clear the loan, then find the time period of the loan.
(8) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.
(9) In how much time a principal of $3200 will amount to $3680 at a simple interest of 5% per annum?
(10) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 5% simple interest?