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) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 3 years.
(2) Find the amount to be paid if Robert borrowed a sum of $5100 at 6% simple interest for 7 years.
(3) Calculate the amount due if Charles borrowed a sum of $3900 at 10% simple interest for 3 years.
(4) Calculate the amount due if Thomas borrowed a sum of $3800 at 6% simple interest for 3 years.
(5) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 5% simple interest.
(6) If James paid $3240 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(7) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $10070 to clear the loan, then find the time period of the loan.
(8) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 8% simple interest?
(9) What amount will be due after 2 years if Daniel borrowed a sum of $3550 at a 5% simple interest?
(10) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 10% simple interest.