Question:
What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 8% simple interest?
Correct Answer
$4550
Solution And Explanation
Solution
Given,
Principal (P) = $3250
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) = $3250 × 8% × 5
= $3250 ×8/100 × 5
= 3250 × 8 × 5/100
= 26000 × 5/100
= 130000/100
= $1300
Thus, Simple Interest = $1300
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 = $3250 + $1300
= $4550
Thus, Amount to be paid = $4550 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 = $3250
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3250 + ($3250 × 8% × 5)
= $3250 + ($3250 ×8/100 × 5)
= $3250 + (3250 × 8 × 5/100)
= $3250 + (26000 × 5/100)
= $3250 + (130000/100)
= $3250 + $1300 = $4550
Thus, Amount (A) to be paid = $4550 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 $3250, the simple interest in 1 year
= 8/100 × 3250
= 8 × 3250/100
= 26000/100 = $260
Thus, simple interest for 1 year = $260
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $260 × 5 = $1300
Thus, Simple Interest (SI) = $1300
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3250 + $1300
= $4550
Thus, Amount to be paid = $4550 Answer
Similar Questions
(1) Jessica took a loan of $5500 at the rate of 7% simple interest per annum. If he paid an amount of $9350 to clear the loan, then find the time period of the loan.
(2) Richard took a loan of $5200 at the rate of 6% simple interest per annum. If he paid an amount of $7384 to clear the loan, then find the time period of the loan.
(3) If Robert borrowed $3100 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(4) Calculate the amount due if Barbara borrowed a sum of $3550 at 3% simple interest for 4 years.
(5) Calculate the amount due after 10 years if Robert borrowed a sum of $5100 at a rate of 6% simple interest.
(6) Betty took a loan of $6500 at the rate of 9% simple interest per annum. If he paid an amount of $11180 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if John borrowed a sum of $3200 at 5% simple interest for 3 years.
(8) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 10% simple interest?
(9) How much loan did Melissa borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9187.5 to clear it?
(10) What amount does Jessica have to pay after 5 years if he takes a loan of $3750 at 7% simple interest?