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) Susan took a loan of $5300 at the rate of 9% simple interest per annum. If he paid an amount of $8162 to clear the loan, then find the time period of the loan.
(2) Find the amount to be paid if Thomas borrowed a sum of $5800 at 2% simple interest for 7 years.
(3) How much loan did George borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8395 to clear it?
(4) Joseph took a loan of $5400 at the rate of 10% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(5) If Charles paid $4368 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(6) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 2% simple interest?
(7) Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 7% simple interest.
(8) If Betty paid $4930 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(10) Calculate the amount due if James borrowed a sum of $3000 at 6% simple interest for 3 years.