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) Joshua had to pay $5194 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 10% simple interest.
(3) What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 2% simple interest?
(4) Calculate the amount due if Christopher borrowed a sum of $4000 at 3% simple interest for 4 years.
(5) What amount does John have to pay after 5 years if he takes a loan of $3200 at 6% simple interest?
(6) Find the amount to be paid if Patricia borrowed a sum of $5150 at 8% simple interest for 7 years.
(7) In how much time a principal of $3200 will amount to $3712 at a simple interest of 4% per annum?
(8) Calculate the amount due if John borrowed a sum of $3200 at 2% simple interest for 3 years.
(9) Calculate the amount due if Sarah borrowed a sum of $3850 at 2% simple interest for 3 years.
(10) Find the amount to be paid if James borrowed a sum of $5000 at 7% simple interest for 8 years.