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) What amount does William have to pay after 6 years if he takes a loan of $3500 at 8% simple interest?
(2) Charles had to pay $4251 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(3) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8700 to clear it?
(4) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 5% simple interest?
(5) Thomas had to pay $4142 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) How much loan did Karen borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7437.5 to clear it?
(7) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $8360 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if Robert borrowed a sum of $3100 at 3% simple interest for 4 years.
(9) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 6% simple interest for 8 years.
(10) Find the amount to be paid if Charles borrowed a sum of $5900 at 10% simple interest for 8 years.