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) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $5440 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 9 years if Linda borrowed a sum of $5350 at a rate of 7% simple interest.
(3) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 10% simple interest.
(4) Calculate the amount due after 9 years if Richard borrowed a sum of $5600 at a rate of 8% simple interest.
(5) How much loan did Richard borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6720 to clear it?
(6) Find the amount to be paid if Robert borrowed a sum of $5100 at 8% simple interest for 8 years.
(7) Calculate the amount due if Charles borrowed a sum of $3900 at 3% simple interest for 4 years.
(8) What amount does Patricia have to pay after 6 years if he takes a loan of $3150 at 9% simple interest?
(9) David had to pay $3808 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) Calculate the amount due if Jessica borrowed a sum of $3750 at 8% simple interest for 4 years.