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) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 9% simple interest.
(2) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 10% simple interest?
(3) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $7520 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 9% simple interest.
(5) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9472 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if David borrowed a sum of $3400 at 6% simple interest for 3 years.
(7) Find the amount to be paid if Sarah borrowed a sum of $5850 at 5% simple interest for 7 years.
(8) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9750 to clear it?
(9) In how much time a principal of $3150 will amount to $3276 at a simple interest of 2% per annum?
(10) Barbara took a loan of $5100 at the rate of 9% simple interest per annum. If he paid an amount of $7854 to clear the loan, then find the time period of the loan.