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) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8892 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Michael borrowed a sum of $5300 at 10% simple interest for 7 years.
(3) In how much time a principal of $3150 will amount to $3622.5 at a simple interest of 3% per annum?
(4) Find the amount to be paid if Charles borrowed a sum of $5900 at 4% simple interest for 7 years.
(5) If Donna paid $5432 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) Calculate the amount due if David borrowed a sum of $3400 at 6% simple interest for 3 years.
(7) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $12540 to clear the loan, then find the time period of the loan.
(8) How much loan did John borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5980 to clear it?
(9) Calculate the amount due if Patricia borrowed a sum of $3150 at 8% simple interest for 3 years.
(10) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $6970 to clear the loan, then find the time period of the loan.