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) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 7% simple interest.
(3) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $7854 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 3% simple interest.
(5) Calculate the amount due if Charles borrowed a sum of $3900 at 9% simple interest for 3 years.
(6) If Paul paid $5452 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(7) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 5% simple interest?
(8) Calculate the amount due if James borrowed a sum of $3000 at 5% simple interest for 3 years.
(9) Donald took a loan of $7000 at the rate of 8% simple interest per annum. If he paid an amount of $10920 to clear the loan, then find the time period of the loan.
(10) What amount will be due after 2 years if John borrowed a sum of $3100 at a 5% simple interest?