Question:
What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 8% simple interest?
Correct Answer
$4620
Solution And Explanation
Solution
Given,
Principal (P) = $3300
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) = $3300 × 8% × 5
= $3300 ×8/100 × 5
= 3300 × 8 × 5/100
= 26400 × 5/100
= 132000/100
= $1320
Thus, Simple Interest = $1320
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 = $3300 + $1320
= $4620
Thus, Amount to be paid = $4620 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 = $3300
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3300 + ($3300 × 8% × 5)
= $3300 + ($3300 ×8/100 × 5)
= $3300 + (3300 × 8 × 5/100)
= $3300 + (26400 × 5/100)
= $3300 + (132000/100)
= $3300 + $1320 = $4620
Thus, Amount (A) to be paid = $4620 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 $3300, the simple interest in 1 year
= 8/100 × 3300
= 8 × 3300/100
= 26400/100 = $264
Thus, simple interest for 1 year = $264
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $264 × 5 = $1320
Thus, Simple Interest (SI) = $1320
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3300 + $1320
= $4620
Thus, Amount to be paid = $4620 Answer
Similar Questions
(1) How much loan did Steven borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7920 to clear it?
(2) Calculate the amount due if William borrowed a sum of $3500 at 2% simple interest for 3 years.
(3) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $9760 to clear the loan, then find the time period of the loan.
(4) If Margaret paid $5220 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(5) Michael had to pay $3696 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 4% simple interest.
(7) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 7% simple interest?
(8) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 7% simple interest?
(9) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 3 years.
(10) In how much time a principal of $3200 will amount to $3520 at a simple interest of 5% per annum?