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) Betty took a loan of $6500 at the rate of 7% simple interest per annum. If he paid an amount of $10140 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Richard borrowed a sum of $3600 at 7% simple interest for 3 years.
(3) If Joshua paid $5880 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $12060 to clear the loan, then find the time period of the loan.
(5) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 10% simple interest?
(6) What amount does David have to pay after 6 years if he takes a loan of $3400 at 4% simple interest?
(7) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 5% simple interest?
(8) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $5822 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if William borrowed a sum of $5500 at 4% simple interest for 7 years.
(10) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $7740 to clear the loan, then find the time period of the loan.