Question:
Calculate the amount due if Elizabeth borrowed a sum of $3450 at 8% simple interest for 4 years.
Correct Answer
$4554
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 8% × 4
= $3450 ×8/100 × 4
= 3450 × 8 × 4/100
= 27600 × 4/100
= 110400/100
= $1104
Thus, Simple Interest = $1104
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 = $3450 + $1104
= $4554
Thus, Amount to be paid = $4554 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 = $3450
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3450 + ($3450 × 8% × 4)
= $3450 + ($3450 ×8/100 × 4)
= $3450 + (3450 × 8 × 4/100)
= $3450 + (27600 × 4/100)
= $3450 + (110400/100)
= $3450 + $1104 = $4554
Thus, Amount (A) to be paid = $4554 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 $3450, the simple interest in 1 year
= 8/100 × 3450
= 8 × 3450/100
= 27600/100 = $276
Thus, simple interest for 1 year = $276
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $276 × 4 = $1104
Thus, Simple Interest (SI) = $1104
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $1104
= $4554
Thus, Amount to be paid = $4554 Answer
Similar Questions
(1) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 10% simple interest?
(2) If Jennifer borrowed $3250 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) If Richard borrowed $3600 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) Charles took a loan of $5800 at the rate of 7% simple interest per annum. If he paid an amount of $9454 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Christopher borrowed a sum of $4000 at 10% simple interest for 4 years.
(6) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $11600 to clear the loan, then find the time period of the loan.
(7) Mark took a loan of $6800 at the rate of 8% simple interest per annum. If he paid an amount of $10064 to clear the loan, then find the time period of the loan.
(8) How much loan did Christopher borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6600 to clear it?
(9) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 8% simple interest.
(10) Christopher took a loan of $6000 at the rate of 7% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.