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) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 6% simple interest?
(2) Calculate the amount due if Sarah borrowed a sum of $3850 at 9% simple interest for 4 years.
(3) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $7661 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 4% simple interest.
(5) Barbara took a loan of $5100 at the rate of 6% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(6) Jessica had to pay $3975 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 7% simple interest?
(8) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $12240 to clear the loan, then find the time period of the loan.
(9) Matthew took a loan of $6400 at the rate of 6% simple interest per annum. If he paid an amount of $9856 to clear the loan, then find the time period of the loan.
(10) Find the amount to be paid if John borrowed a sum of $5200 at 2% simple interest for 8 years.