Question:
What amount does Elizabeth have to pay after 5 years if he takes a loan of $3450 at 8% simple interest?
Correct Answer
$4830
Solution And Explanation
Solution
Given,
Principal (P) = $3450
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) = $3450 × 8% × 5
= $3450 ×8/100 × 5
= 3450 × 8 × 5/100
= 27600 × 5/100
= 138000/100
= $1380
Thus, Simple Interest = $1380
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 = $3450 + $1380
= $4830
Thus, Amount to be paid = $4830 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 = $3450
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3450 + ($3450 × 8% × 5)
= $3450 + ($3450 ×8/100 × 5)
= $3450 + (3450 × 8 × 5/100)
= $3450 + (27600 × 5/100)
= $3450 + (138000/100)
= $3450 + $1380 = $4830
Thus, Amount (A) to be paid = $4830 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 $3450, the simple interest in 1 year
= 8/100 × 3450
= 8 × 3450/100
= 27600/100 = $276
Thus, simple interest for 1 year = $276
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $276 × 5 = $1380
Thus, Simple Interest (SI) = $1380
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3450 + $1380
= $4830
Thus, Amount to be paid = $4830 Answer
Similar Questions
(1) Michelle had to pay $5247 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7315 to clear it?
(3) If Linda paid $4020 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12920 to clear the loan, then find the time period of the loan.
(5) In how much time a principal of $3050 will amount to $3324.5 at a simple interest of 3% per annum?
(6) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 10% simple interest?
(7) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(8) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 10% simple interest?
(9) How much loan did Jacob borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $9600 to clear it?
(10) Calculate the amount due if Mary borrowed a sum of $3050 at 7% simple interest for 4 years.