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) How much loan did Kenneth borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8750 to clear it?
(2) Christopher took a loan of $6000 at the rate of 7% simple interest per annum. If he paid an amount of $10200 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Mary borrowed a sum of $5050 at 8% simple interest for 8 years.
(4) What amount does Mary have to pay after 6 years if he takes a loan of $3050 at 2% simple interest?
(5) If John paid $3840 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(6) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 7% simple interest?
(7) Robert took a loan of $4200 at the rate of 9% simple interest per annum. If he paid an amount of $7224 to clear the loan, then find the time period of the loan.
(8) Ashley had to pay $4959.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(9) How much loan did Rebecca borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9562.5 to clear it?
(10) Calculate the amount due if Richard borrowed a sum of $3600 at 7% simple interest for 3 years.