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) Robert took a loan of $4200 at the rate of 10% simple interest per annum. If he paid an amount of $7560 to clear the loan, then find the time period of the loan.
(2) Christopher took a loan of $6000 at the rate of 10% simple interest per annum. If he paid an amount of $10800 to clear the loan, then find the time period of the loan.
(3) William took a loan of $5000 at the rate of 10% simple interest per annum. If he paid an amount of $8000 to clear the loan, then find the time period of the loan.
(4) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 3% simple interest?
(5) Donna had to pay $5432 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) Find the amount to be paid if Susan borrowed a sum of $5650 at 6% simple interest for 7 years.
(7) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 8% simple interest.
(8) What amount does William have to pay after 6 years if he takes a loan of $3500 at 3% simple interest?
(9) Find the amount to be paid if Susan borrowed a sum of $5650 at 5% simple interest for 8 years.
(10) In how much time a principal of $3050 will amount to $3324.5 at a simple interest of 3% per annum?