Question:
Calculate the amount due if Christopher borrowed a sum of $4000 at 8% simple interest for 4 years.
Correct Answer
$5280
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 8% × 4
= $4000 ×8/100 × 4
= 4000 × 8 × 4/100
= 32000 × 4/100
= 128000/100
= $1280
Thus, Simple Interest = $1280
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 = $4000 + $1280
= $5280
Thus, Amount to be paid = $5280 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 = $4000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 4 years
Thus, Amount (A)
= $4000 + ($4000 × 8% × 4)
= $4000 + ($4000 ×8/100 × 4)
= $4000 + (4000 × 8 × 4/100)
= $4000 + (32000 × 4/100)
= $4000 + (128000/100)
= $4000 + $1280 = $5280
Thus, Amount (A) to be paid = $5280 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 $4000, the simple interest in 1 year
= 8/100 × 4000
= 8 × 4000/100
= 32000/100 = $320
Thus, simple interest for 1 year = $320
Therefore, simple interest for 4 years
= Simple interest for 1 year × 4
= $320 × 4 = $1280
Thus, Simple Interest (SI) = $1280
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1280
= $5280
Thus, Amount to be paid = $5280 Answer
Similar Questions
(1) Donald had to pay $5175 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(2) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 4 years.
(3) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 8% simple interest?
(4) If Sarah paid $4312 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(5) Calculate the amount due if Barbara borrowed a sum of $3550 at 10% simple interest for 4 years.
(6) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 9% simple interest?
(7) What amount will be due after 2 years if Daniel borrowed a sum of $3550 at a 10% simple interest?
(8) If Steven paid $5336 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Calculate the amount due if Robert borrowed a sum of $3100 at 7% simple interest for 4 years.
(10) Find the amount to be paid if Richard borrowed a sum of $5600 at 6% simple interest for 8 years.