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) Find the amount to be paid if William borrowed a sum of $5500 at 5% simple interest for 7 years.
(2) Sandra took a loan of $6900 at the rate of 10% simple interest per annum. If he paid an amount of $13110 to clear the loan, then find the time period of the loan.
(3) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 9% simple interest?
(4) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 6% simple interest.
(5) What amount does William have to pay after 6 years if he takes a loan of $3500 at 6% simple interest?
(6) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 6% simple interest.
(7) In how much time a principal of $3000 will amount to $3240 at a simple interest of 2% per annum?
(8) Find the amount to be paid if Barbara borrowed a sum of $5550 at 7% simple interest for 7 years.
(9) How much loan did Robert borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5610 to clear it?
(10) Calculate the amount due if Robert borrowed a sum of $3100 at 2% simple interest for 4 years.