Question:
What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 8% simple interest?
Correct Answer
$5040
Solution And Explanation
Solution
Given,
Principal (P) = $3600
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) = $3600 × 8% × 5
= $3600 ×8/100 × 5
= 3600 × 8 × 5/100
= 28800 × 5/100
= 144000/100
= $1440
Thus, Simple Interest = $1440
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 = $3600 + $1440
= $5040
Thus, Amount to be paid = $5040 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 = $3600
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3600 + ($3600 × 8% × 5)
= $3600 + ($3600 ×8/100 × 5)
= $3600 + (3600 × 8 × 5/100)
= $3600 + (28800 × 5/100)
= $3600 + (144000/100)
= $3600 + $1440 = $5040
Thus, Amount (A) to be paid = $5040 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 $3600, the simple interest in 1 year
= 8/100 × 3600
= 8 × 3600/100
= 28800/100 = $288
Thus, simple interest for 1 year = $288
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $288 × 5 = $1440
Thus, Simple Interest (SI) = $1440
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3600 + $1440
= $5040
Thus, Amount to be paid = $5040 Answer
Similar Questions
(1) Karen took a loan of $5900 at the rate of 8% simple interest per annum. If he paid an amount of $10620 to clear the loan, then find the time period of the loan.
(2) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $13400 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 4% simple interest.
(4) If Joseph borrowed $3700 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(5) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 3% simple interest?
(6) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 10% simple interest?
(7) Calculate the amount due if David borrowed a sum of $3400 at 8% simple interest for 4 years.
(8) Kenneth had to pay $5300 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(9) What amount does Richard have to pay after 5 years if he takes a loan of $3600 at 3% simple interest?
(10) How much loan did Richard borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6160 to clear it?