Question:
What amount does William have to pay after 5 years if he takes a loan of $3500 at 8% simple interest?
Correct Answer
$4900
Solution And Explanation
Solution
Given,
Principal (P) = $3500
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) = $3500 × 8% × 5
= $3500 ×8/100 × 5
= 3500 × 8 × 5/100
= 28000 × 5/100
= 140000/100
= $1400
Thus, Simple Interest = $1400
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 = $3500 + $1400
= $4900
Thus, Amount to be paid = $4900 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 = $3500
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3500 + ($3500 × 8% × 5)
= $3500 + ($3500 ×8/100 × 5)
= $3500 + (3500 × 8 × 5/100)
= $3500 + (28000 × 5/100)
= $3500 + (140000/100)
= $3500 + $1400 = $4900
Thus, Amount (A) to be paid = $4900 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 $3500, the simple interest in 1 year
= 8/100 × 3500
= 8 × 3500/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $280 × 5 = $1400
Thus, Simple Interest (SI) = $1400
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $1400
= $4900
Thus, Amount to be paid = $4900 Answer
Similar Questions
(1) Jessica took a loan of $5500 at the rate of 9% simple interest per annum. If he paid an amount of $9955 to clear the loan, then find the time period of the loan.
(2) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 10% simple interest?
(3) Calculate the amount due if Jennifer borrowed a sum of $3250 at 8% simple interest for 3 years.
(4) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $11390 to clear the loan, then find the time period of the loan.
(5) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7647.5 to clear it?
(6) How much loan did Nancy borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7687.5 to clear it?
(7) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $11560 to clear the loan, then find the time period of the loan.
(8) In how much time a principal of $3150 will amount to $3402 at a simple interest of 2% per annum?
(9) What amount will be due after 2 years if Steven borrowed a sum of $3800 at a 4% simple interest?
(10) Find the amount to be paid if Linda borrowed a sum of $5350 at 6% simple interest for 7 years.