Question:
What amount does James have to pay after 5 years if he takes a loan of $3000 at 8% simple interest?
Correct Answer
$4200
Solution And Explanation
Solution
Given,
Principal (P) = $3000
Rate of Simple Interest (SI) = 8%
Time (t) = 5 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) = $3000 × 8% × 5
= $3000 ×8/100 × 5
= 3000 × 8 × 5/100
= 24000 × 5/100
= 120000/100
= $1200
Thus, Simple Interest = $1200
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 = $3000 + $1200
= $4200
Thus, Amount to be paid = $4200 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 = $3000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3000 + ($3000 × 8% × 5)
= $3000 + ($3000 ×8/100 × 5)
= $3000 + (3000 × 8 × 5/100)
= $3000 + (24000 × 5/100)
= $3000 + (120000/100)
= $3000 + $1200 = $4200
Thus, Amount (A) to be paid = $4200 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 $3000, the simple interest in 1 year
= 8/100 × 3000
= 8 × 3000/100
= 24000/100 = $240
Thus, simple interest for 1 year = $240
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $240 × 5 = $1200
Thus, Simple Interest (SI) = $1200
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3000 + $1200
= $4200
Thus, Amount to be paid = $4200 Answer
Similar Questions
(1) Find the amount to be paid if Thomas borrowed a sum of $5800 at 7% simple interest for 7 years.
(2) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $8145 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 5% simple interest.
(4) If Joshua paid $5292 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(5) Find the amount to be paid if Jessica borrowed a sum of $5750 at 5% simple interest for 8 years.
(6) Anthony took a loan of $6600 at the rate of 8% simple interest per annum. If he paid an amount of $10296 to clear the loan, then find the time period of the loan.
(7) What amount will be due after 2 years if John borrowed a sum of $3100 at a 10% simple interest?
(8) Calculate the amount due if Jennifer borrowed a sum of $3250 at 10% simple interest for 4 years.
(9) Calculate the amount due if Joseph borrowed a sum of $3700 at 10% simple interest for 3 years.
(10) Calculate the amount due if Sarah borrowed a sum of $3850 at 9% simple interest for 3 years.