Question:
What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 8% simple interest?
Correct Answer
$5320
Solution And Explanation
Solution
Given,
Principal (P) = $3800
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) = $3800 × 8% × 5
= $3800 ×8/100 × 5
= 3800 × 8 × 5/100
= 30400 × 5/100
= 152000/100
= $1520
Thus, Simple Interest = $1520
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 = $3800 + $1520
= $5320
Thus, Amount to be paid = $5320 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 = $3800
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3800 + ($3800 × 8% × 5)
= $3800 + ($3800 ×8/100 × 5)
= $3800 + (3800 × 8 × 5/100)
= $3800 + (30400 × 5/100)
= $3800 + (152000/100)
= $3800 + $1520 = $5320
Thus, Amount (A) to be paid = $5320 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 $3800, the simple interest in 1 year
= 8/100 × 3800
= 8 × 3800/100
= 30400/100 = $304
Thus, simple interest for 1 year = $304
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $304 × 5 = $1520
Thus, Simple Interest (SI) = $1520
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3800 + $1520
= $5320
Thus, Amount to be paid = $5320 Answer
Similar Questions
(1) Calculate the amount due if Susan borrowed a sum of $3650 at 2% simple interest for 3 years.
(2) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 8% simple interest.
(3) Linda took a loan of $4700 at the rate of 7% simple interest per annum. If he paid an amount of $7990 to clear the loan, then find the time period of the loan.
(4) Christopher took a loan of $6000 at the rate of 6% simple interest per annum. If he paid an amount of $8520 to clear the loan, then find the time period of the loan.
(5) Susan had to pay $4088 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 6% simple interest.
(7) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $9310 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if Mary borrowed a sum of $3050 at 7% simple interest for 4 years.
(9) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 2% simple interest.
(10) Mark took a loan of $6800 at the rate of 10% simple interest per annum. If he paid an amount of $13600 to clear the loan, then find the time period of the loan.