Question:
Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 4 years.
Correct Answer
$5214
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 8% × 4
= $3950 ×8/100 × 4
= 3950 × 8 × 4/100
= 31600 × 4/100
= 126400/100
= $1264
Thus, Simple Interest = $1264
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 = $3950 + $1264
= $5214
Thus, Amount to be paid = $5214 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 = $3950
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $3950 + ($3950 × 8% × 4)
= $3950 + ($3950 ×8/100 × 4)
= $3950 + (3950 × 8 × 4/100)
= $3950 + (31600 × 4/100)
= $3950 + (126400/100)
= $3950 + $1264 = $5214
Thus, Amount (A) to be paid = $5214 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 $3950, the simple interest in 1 year
= 8/100 × 3950
= 8 × 3950/100
= 31600/100 = $316
Thus, simple interest for 1 year = $316
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $316 × 4 = $1264
Thus, Simple Interest (SI) = $1264
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1264
= $5214
Thus, Amount to be paid = $5214 Answer
Similar Questions
(1) How much loan did Susan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6780 to clear it?
(2) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 9% simple interest.
(3) David took a loan of $4800 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Charles borrowed a sum of $5900 at 8% simple interest for 7 years.
(5) William took a loan of $5000 at the rate of 6% simple interest per annum. If he paid an amount of $7400 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 6% simple interest.
(7) Calculate the amount due if Jessica borrowed a sum of $3750 at 2% simple interest for 3 years.
(8) If Jennifer paid $3640 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(9) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 3% simple interest.
(10) If Nancy paid $4648 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.