Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 8% simple interest for 3 years.
Correct Answer
$4960
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 8% × 3
= $4000 ×8/100 × 3
= 4000 × 8 × 3/100
= 32000 × 3/100
= 96000/100
= $960
Thus, Simple Interest = $960
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 = $4000 + $960
= $4960
Thus, Amount to be paid = $4960 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 = $4000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 3 years
Thus, Amount (A)
= $4000 + ($4000 × 8% × 3)
= $4000 + ($4000 ×8/100 × 3)
= $4000 + (4000 × 8 × 3/100)
= $4000 + (32000 × 3/100)
= $4000 + (96000/100)
= $4000 + $960 = $4960
Thus, Amount (A) to be paid = $4960 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 $4000, the simple interest in 1 year
= 8/100 × 4000
= 8 × 4000/100
= 32000/100 = $320
Thus, simple interest for 1 year = $320
Therefore, simple interest for 3 years
= Simple interest for 1 year × 3
= $320 × 3 = $960
Thus, Simple Interest (SI) = $960
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $960
= $4960
Thus, Amount to be paid = $4960 Answer
Similar Questions
(1) Margaret had to pay $4872 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) If Michael borrowed $3300 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) How much loan did Donald borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7800 to clear it?
(4) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $6560 to clear the loan, then find the time period of the loan.
(5) How much loan did Emily borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7425 to clear it?
(6) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9028 to clear the loan, then find the time period of the loan.
(7) If Mark paid $5104 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(8) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $11050 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 5% simple interest.
(10) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.