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) Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 3 years.
(2) If Charles paid $4368 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(3) If Barbara paid $3976 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(4) Elizabeth took a loan of $4900 at the rate of 8% simple interest per annum. If he paid an amount of $7644 to clear the loan, then find the time period of the loan.
(5) What amount will be due after 2 years if James borrowed a sum of $3000 at a 4% simple interest?
(6) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(7) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 4% simple interest?
(8) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
(9) Find the amount to be paid if Jessica borrowed a sum of $5750 at 8% simple interest for 8 years.
(10) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $7216 to clear the loan, then find the time period of the loan.