Question:
What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 8% simple interest?
Correct Answer
$5460
Solution And Explanation
Solution
Given,
Principal (P) = $3900
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) = $3900 × 8% × 5
= $3900 ×8/100 × 5
= 3900 × 8 × 5/100
= 31200 × 5/100
= 156000/100
= $1560
Thus, Simple Interest = $1560
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 = $3900 + $1560
= $5460
Thus, Amount to be paid = $5460 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 = $3900
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3900 + ($3900 × 8% × 5)
= $3900 + ($3900 ×8/100 × 5)
= $3900 + (3900 × 8 × 5/100)
= $3900 + (31200 × 5/100)
= $3900 + (156000/100)
= $3900 + $1560 = $5460
Thus, Amount (A) to be paid = $5460 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 $3900, the simple interest in 1 year
= 8/100 × 3900
= 8 × 3900/100
= 31200/100 = $312
Thus, simple interest for 1 year = $312
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $312 × 5 = $1560
Thus, Simple Interest (SI) = $1560
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3900 + $1560
= $5460
Thus, Amount to be paid = $5460 Answer
Similar Questions
(1) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 9% simple interest?
(2) How much loan did Stephanie borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9437.5 to clear it?
(3) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 10% simple interest for 3 years.
(4) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 7 years.
(5) How much loan did Deborah borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8940 to clear it?
(6) In how much time a principal of $3050 will amount to $3355 at a simple interest of 5% per annum?
(7) What amount does James have to pay after 6 years if he takes a loan of $3000 at 10% simple interest?
(8) Charles took a loan of $5800 at the rate of 10% simple interest per annum. If he paid an amount of $11020 to clear the loan, then find the time period of the loan.
(9) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 7% simple interest?
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 5% simple interest?