Question:
Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 4 years.
Correct Answer
$4488
Solution And Explanation
Solution
Given,
Principal (P) = $3400
Rate of Simple Interest (SI) = 8%
Time (t) = 4 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) = $3400 × 8% × 4
= $3400 ×8/100 × 4
= 3400 × 8 × 4/100
= 27200 × 4/100
= 108800/100
= $1088
Thus, Simple Interest = $1088
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 = $3400 + $1088
= $4488
Thus, Amount to be paid = $4488 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 = $3400
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3400 + ($3400 × 8% × 4)
= $3400 + ($3400 ×8/100 × 4)
= $3400 + (3400 × 8 × 4/100)
= $3400 + (27200 × 4/100)
= $3400 + (108800/100)
= $3400 + $1088 = $4488
Thus, Amount (A) to be paid = $4488 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 $3400, the simple interest in 1 year
= 8/100 × 3400
= 8 × 3400/100
= 27200/100 = $272
Thus, simple interest for 1 year = $272
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $272 × 4 = $1088
Thus, Simple Interest (SI) = $1088
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $1088
= $4488
Thus, Amount to be paid = $4488 Answer
Similar Questions
(1) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 4% simple interest?
(2) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.
(3) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 8% simple interest.
(4) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9856 to clear the loan, then find the time period of the loan.
(5) Sarah took a loan of $5700 at the rate of 6% simple interest per annum. If he paid an amount of $8436 to clear the loan, then find the time period of the loan.
(6) What amount will be due after 2 years if Paul borrowed a sum of $3850 at a 7% simple interest?
(7) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 10% simple interest for 8 years.
(8) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $7238 to clear the loan, then find the time period of the loan.
(9) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $10710 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.