Question:
What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 8% simple interest?
Correct Answer
$5390
Solution And Explanation
Solution
Given,
Principal (P) = $3850
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) = $3850 × 8% × 5
= $3850 ×8/100 × 5
= 3850 × 8 × 5/100
= 30800 × 5/100
= 154000/100
= $1540
Thus, Simple Interest = $1540
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 = $3850 + $1540
= $5390
Thus, Amount to be paid = $5390 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 = $3850
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3850 + ($3850 × 8% × 5)
= $3850 + ($3850 ×8/100 × 5)
= $3850 + (3850 × 8 × 5/100)
= $3850 + (30800 × 5/100)
= $3850 + (154000/100)
= $3850 + $1540 = $5390
Thus, Amount (A) to be paid = $5390 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 $3850, the simple interest in 1 year
= 8/100 × 3850
= 8 × 3850/100
= 30800/100 = $308
Thus, simple interest for 1 year = $308
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $308 × 5 = $1540
Thus, Simple Interest (SI) = $1540
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3850 + $1540
= $5390
Thus, Amount to be paid = $5390 Answer
Similar Questions
(1) Calculate the amount due if Sarah borrowed a sum of $3850 at 3% simple interest for 4 years.
(2) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 7% simple interest.
(3) Calculate the amount due if Susan borrowed a sum of $3650 at 7% simple interest for 3 years.
(4) Calculate the amount due after 9 years if Mary borrowed a sum of $5050 at a rate of 10% simple interest.
(5) 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.
(6) If David paid $3808 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $8856 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 4% simple interest.
(9) Calculate the amount due if Susan borrowed a sum of $3650 at 6% simple interest for 3 years.
(10) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9180 to clear the loan, then find the time period of the loan.