Question:
What amount does David have to pay after 5 years if he takes a loan of $3400 at 8% simple interest?
Correct Answer
$4760
Solution And Explanation
Solution
Given,
Principal (P) = $3400
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) = $3400 × 8% × 5
= $3400 ×8/100 × 5
= 3400 × 8 × 5/100
= 27200 × 5/100
= 136000/100
= $1360
Thus, Simple Interest = $1360
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 = $3400 + $1360
= $4760
Thus, Amount to be paid = $4760 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 = $3400
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3400 + ($3400 × 8% × 5)
= $3400 + ($3400 ×8/100 × 5)
= $3400 + (3400 × 8 × 5/100)
= $3400 + (27200 × 5/100)
= $3400 + (136000/100)
= $3400 + $1360 = $4760
Thus, Amount (A) to be paid = $4760 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 $3400, the simple interest in 1 year
= 8/100 × 3400
= 8 × 3400/100
= 27200/100 = $272
Thus, simple interest for 1 year = $272
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $272 × 5 = $1360
Thus, Simple Interest (SI) = $1360
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3400 + $1360
= $4760
Thus, Amount to be paid = $4760 Answer
Similar Questions
(1) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 5% simple interest?
(2) Thomas took a loan of $5600 at the rate of 6% simple interest per annum. If he paid an amount of $7952 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Susan borrowed a sum of $3650 at 10% simple interest for 4 years.
(4) If Christopher borrowed $4000 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(5) Calculate the amount due if Charles borrowed a sum of $3900 at 3% simple interest for 3 years.
(6) If Donna paid $5820 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(7) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 7% simple interest.
(8) Calculate the amount due if Mary borrowed a sum of $3050 at 7% simple interest for 3 years.
(9) Calculate the amount due after 9 years if Robert borrowed a sum of $5100 at a rate of 8% simple interest.
(10) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $8856 to clear the loan, then find the time period of the loan.