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) If Nancy paid $4980 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) If Sarah borrowed $3850 from a bank at a rate of 2% simple interest per annum then find the amount to be paid after 2 years.
(3) Jessica took a loan of $5500 at the rate of 7% simple interest per annum. If he paid an amount of $7810 to clear the loan, then find the time period of the loan.
(4) John took a loan of $4400 at the rate of 9% simple interest per annum. If he paid an amount of $7964 to clear the loan, then find the time period of the loan.
(5) How much loan did Steven borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7260 to clear it?
(6) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 6% simple interest.
(7) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 3% simple interest for 8 years.
(8) Calculate the amount due if Christopher borrowed a sum of $4000 at 7% simple interest for 4 years.
(9) Find the amount to be paid if James borrowed a sum of $5000 at 5% simple interest for 7 years.
(10) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 9% simple interest?