Question:
What amount does John have to pay after 5 years if he takes a loan of $3200 at 8% simple interest?
Correct Answer
$4480
Solution And Explanation
Solution
Given,
Principal (P) = $3200
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) = $3200 × 8% × 5
= $3200 ×8/100 × 5
= 3200 × 8 × 5/100
= 25600 × 5/100
= 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 = $3200 + $1280
= $4480
Thus, Amount to be paid = $4480 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 = $3200
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3200 + ($3200 × 8% × 5)
= $3200 + ($3200 ×8/100 × 5)
= $3200 + (3200 × 8 × 5/100)
= $3200 + (25600 × 5/100)
= $3200 + (128000/100)
= $3200 + $1280 = $4480
Thus, Amount (A) to be paid = $4480 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 $3200, the simple interest in 1 year
= 8/100 × 3200
= 8 × 3200/100
= 25600/100 = $256
Thus, simple interest for 1 year = $256
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $256 × 5 = $1280
Thus, Simple Interest (SI) = $1280
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3200 + $1280
= $4480
Thus, Amount to be paid = $4480 Answer
Similar Questions
(1) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 10% simple interest?
(2) William took a loan of $5000 at the rate of 8% simple interest per annum. If he paid an amount of $8600 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Michael borrowed a sum of $5300 at 3% simple interest for 7 years.
(4) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(5) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $10472 to clear the loan, then find the time period of the loan.
(6) What amount does James have to pay after 5 years if he takes a loan of $3000 at 5% simple interest?
(7) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 10% simple interest.
(8) Joseph took a loan of $5400 at the rate of 6% simple interest per annum. If he paid an amount of $7992 to clear the loan, then find the time period of the loan.
(9) If William paid $4060 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(10) Patricia took a loan of $4300 at the rate of 8% simple interest per annum. If he paid an amount of $7052 to clear the loan, then find the time period of the loan.