Question:
Calculate the amount due if Sarah borrowed a sum of $3850 at 8% simple interest for 4 years.
Correct Answer
$5082
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 8% × 4
= $3850 ×8/100 × 4
= 3850 × 8 × 4/100
= 30800 × 4/100
= 123200/100
= $1232
Thus, Simple Interest = $1232
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 = $3850 + $1232
= $5082
Thus, Amount to be paid = $5082 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 = $3850
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3850 + ($3850 × 8% × 4)
= $3850 + ($3850 ×8/100 × 4)
= $3850 + (3850 × 8 × 4/100)
= $3850 + (30800 × 4/100)
= $3850 + (123200/100)
= $3850 + $1232 = $5082
Thus, Amount (A) to be paid = $5082 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 $3850, the simple interest in 1 year
= 8/100 × 3850
= 8 × 3850/100
= 30800/100 = $308
Thus, simple interest for 1 year = $308
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $308 × 4 = $1232
Thus, Simple Interest (SI) = $1232
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $1232
= $5082
Thus, Amount to be paid = $5082 Answer
Similar Questions
(1) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 4 years.
(2) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 7% simple interest.
(3) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 10% simple interest?
(4) Calculate the amount due if William borrowed a sum of $3500 at 8% simple interest for 4 years.
(5) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 10% simple interest?
(6) What amount does Joseph have to pay after 6 years if he takes a loan of $3700 at 3% simple interest?
(7) Calculate the amount due if David borrowed a sum of $3400 at 5% simple interest for 3 years.
(8) Find the amount to be paid if William borrowed a sum of $5500 at 10% simple interest for 7 years.
(9) How much loan did Timothy borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8140 to clear it?
(10) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 4% simple interest.