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) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $10106 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 2% simple interest for 4 years.
(3) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 3% simple interest.
(4) David had to pay $3706 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 5% simple interest.
(6) What amount does John have to pay after 6 years if he takes a loan of $3200 at 9% simple interest?
(7) Calculate the amount due if Charles borrowed a sum of $3900 at 8% simple interest for 4 years.
(8) Calculate the amount due after 9 years if William borrowed a sum of $5500 at a rate of 8% simple interest.
(9) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $10440 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if Mary borrowed a sum of $5050 at 6% simple interest for 7 years.