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) If Christopher paid $4480 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(2) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 7% simple interest.
(3) Nancy took a loan of $6300 at the rate of 9% simple interest per annum. If he paid an amount of $10836 to clear the loan, then find the time period of the loan.
(4) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 5% simple interest?
(5) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6540 to clear it?
(6) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 3% simple interest?
(7) Find the amount to be paid if William borrowed a sum of $5500 at 9% simple interest for 8 years.
(8) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7668 to clear the loan, then find the time period of the loan.
(9) In how much time a principal of $3100 will amount to $3472 at a simple interest of 3% per annum?
(10) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 9% simple interest?