Question:
What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 8% simple interest?
Correct Answer
$4690
Solution And Explanation
Solution
Given,
Principal (P) = $3350
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) = $3350 × 8% × 5
= $3350 ×8/100 × 5
= 3350 × 8 × 5/100
= 26800 × 5/100
= 134000/100
= $1340
Thus, Simple Interest = $1340
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 = $3350 + $1340
= $4690
Thus, Amount to be paid = $4690 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 = $3350
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3350 + ($3350 × 8% × 5)
= $3350 + ($3350 ×8/100 × 5)
= $3350 + (3350 × 8 × 5/100)
= $3350 + (26800 × 5/100)
= $3350 + (134000/100)
= $3350 + $1340 = $4690
Thus, Amount (A) to be paid = $4690 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 $3350, the simple interest in 1 year
= 8/100 × 3350
= 8 × 3350/100
= 26800/100 = $268
Thus, simple interest for 1 year = $268
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $268 × 5 = $1340
Thus, Simple Interest (SI) = $1340
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3350 + $1340
= $4690
Thus, Amount to be paid = $4690 Answer
Similar Questions
(1) How much loan did Brian borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7920 to clear it?
(2) Find the amount to be paid if Jessica borrowed a sum of $5750 at 10% simple interest for 7 years.
(3) Susan took a loan of $5300 at the rate of 10% simple interest per annum. If he paid an amount of $10070 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 7 years.
(5) Sarah had to pay $4427.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(6) Joshua had to pay $5194 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) Matthew took a loan of $6400 at the rate of 10% simple interest per annum. If he paid an amount of $12160 to clear the loan, then find the time period of the loan.
(8) Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 10 years if Christopher borrowed a sum of $6000 at a rate of 6% simple interest.
(10) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 4% simple interest?