Question:
What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 8% simple interest?
Correct Answer
$5180
Solution And Explanation
Solution
Given,
Principal (P) = $3700
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) = $3700 × 8% × 5
= $3700 ×8/100 × 5
= 3700 × 8 × 5/100
= 29600 × 5/100
= 148000/100
= $1480
Thus, Simple Interest = $1480
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 = $3700 + $1480
= $5180
Thus, Amount to be paid = $5180 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 = $3700
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3700 + ($3700 × 8% × 5)
= $3700 + ($3700 ×8/100 × 5)
= $3700 + (3700 × 8 × 5/100)
= $3700 + (29600 × 5/100)
= $3700 + (148000/100)
= $3700 + $1480 = $5180
Thus, Amount (A) to be paid = $5180 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 $3700, the simple interest in 1 year
= 8/100 × 3700
= 8 × 3700/100
= 29600/100 = $296
Thus, simple interest for 1 year = $296
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $296 × 5 = $1480
Thus, Simple Interest (SI) = $1480
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3700 + $1480
= $5180
Thus, Amount to be paid = $5180 Answer
Similar Questions
(1) Nancy took a loan of $6300 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.
(2) What amount will be due after 2 years if Robert borrowed a sum of $3050 at a 4% simple interest?
(3) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 8% simple interest?
(4) Calculate the amount due if James borrowed a sum of $3000 at 10% simple interest for 3 years.
(5) Find the amount to be paid if Richard borrowed a sum of $5600 at 7% simple interest for 8 years.
(6) Mark took a loan of $6800 at the rate of 7% simple interest per annum. If he paid an amount of $10132 to clear the loan, then find the time period of the loan.
(7) James had to pay $3270 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(8) In how much time a principal of $3150 will amount to $3402 at a simple interest of 4% per annum?
(9) How much loan did Steven borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8250 to clear it?
(10) If Karen paid $4266 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.