Question:
Calculate the amount due if William borrowed a sum of $3500 at 8% simple interest for 4 years.
Correct Answer
$4620
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 8% × 4
= $3500 ×8/100 × 4
= 3500 × 8 × 4/100
= 28000 × 4/100
= 112000/100
= $1120
Thus, Simple Interest = $1120
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 = $3500 + $1120
= $4620
Thus, Amount to be paid = $4620 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 = $3500
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3500 + ($3500 × 8% × 4)
= $3500 + ($3500 ×8/100 × 4)
= $3500 + (3500 × 8 × 4/100)
= $3500 + (28000 × 4/100)
= $3500 + (112000/100)
= $3500 + $1120 = $4620
Thus, Amount (A) to be paid = $4620 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 $3500, the simple interest in 1 year
= 8/100 × 3500
= 8 × 3500/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $280 × 4 = $1120
Thus, Simple Interest (SI) = $1120
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $1120
= $4620
Thus, Amount to be paid = $4620 Answer
Similar Questions
(1) Calculate the amount due after 10 years if William borrowed a sum of $5500 at a rate of 4% simple interest.
(2) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 2% simple interest for 4 years.
(3) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $8800 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if Charles borrowed a sum of $3900 at 3% simple interest for 3 years.
(5) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8493 to clear the loan, then find the time period of the loan.
(6) Elizabeth had to pay $3657 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) Sandra took a loan of $6900 at the rate of 7% simple interest per annum. If he paid an amount of $11730 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if Michael borrowed a sum of $3300 at 6% simple interest for 3 years.
(9) Find the amount to be paid if Robert borrowed a sum of $5100 at 4% simple interest for 8 years.
(10) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 7% simple interest.