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) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.
(2) How much loan did Sharon borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8525 to clear it?
(3) Calculate the amount due if Richard borrowed a sum of $3600 at 8% simple interest for 3 years.
(4) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 4% simple interest?
(5) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 3% simple interest?
(6) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 2% simple interest.
(7) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7315 to clear it?
(8) Sarah took a loan of $5700 at the rate of 7% simple interest per annum. If he paid an amount of $8493 to clear the loan, then find the time period of the loan.
(9) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $10450 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 3 years.