Question:
Calculate the amount due if Jessica borrowed a sum of $3750 at 8% simple interest for 4 years.
Correct Answer
$4950
Solution And Explanation
Solution
Given,
Principal (P) = $3750
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) = $3750 × 8% × 4
= $3750 ×8/100 × 4
= 3750 × 8 × 4/100
= 30000 × 4/100
= 120000/100
= $1200
Thus, Simple Interest = $1200
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 = $3750 + $1200
= $4950
Thus, Amount to be paid = $4950 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 = $3750
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3750 + ($3750 × 8% × 4)
= $3750 + ($3750 ×8/100 × 4)
= $3750 + (3750 × 8 × 4/100)
= $3750 + (30000 × 4/100)
= $3750 + (120000/100)
= $3750 + $1200 = $4950
Thus, Amount (A) to be paid = $4950 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 $3750, the simple interest in 1 year
= 8/100 × 3750
= 8 × 3750/100
= 30000/100 = $300
Thus, simple interest for 1 year = $300
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $300 × 4 = $1200
Thus, Simple Interest (SI) = $1200
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3750 + $1200
= $4950
Thus, Amount to be paid = $4950 Answer
Similar Questions
(1) Anthony had to pay $4558 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 5% simple interest?
(3) Calculate the amount due after 10 years if David borrowed a sum of $5400 at a rate of 5% simple interest.
(4) Anthony took a loan of $6600 at the rate of 6% simple interest per annum. If he paid an amount of $8976 to clear the loan, then find the time period of the loan.
(5) Betty had to pay $4505 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(6) Matthew had to pay $4452 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) Calculate the amount due after 9 years if Joseph borrowed a sum of $5700 at a rate of 6% simple interest.
(8) Christopher took a loan of $6000 at the rate of 7% simple interest per annum. If he paid an amount of $8940 to clear the loan, then find the time period of the loan.
(9) Charles had to pay $4485 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(10) Find the amount to be paid if Mary borrowed a sum of $5050 at 9% simple interest for 8 years.