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) What amount does Barbara have to pay after 5 years if he takes a loan of $3550 at 8% simple interest?
(2) Calculate the amount due if Charles borrowed a sum of $3900 at 5% simple interest for 4 years.
(3) Robert had to pay $3472 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(4) What amount does David have to pay after 5 years if he takes a loan of $3400 at 7% simple interest?
(5) Lisa took a loan of $6100 at the rate of 9% simple interest per annum. If he paid an amount of $10492 to clear the loan, then find the time period of the loan.
(6) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $8313 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 3% simple interest.
(8) In how much time a principal of $3050 will amount to $3294 at a simple interest of 2% per annum?
(9) In how much time a principal of $3000 will amount to $3360 at a simple interest of 4% per annum?
(10) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 9% simple interest.