Question:
What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 8% simple interest?
Correct Answer
$5530
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 8% × 5
= $3950 ×8/100 × 5
= 3950 × 8 × 5/100
= 31600 × 5/100
= 158000/100
= $1580
Thus, Simple Interest = $1580
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 = $3950 + $1580
= $5530
Thus, Amount to be paid = $5530 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 = $3950
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $3950 + ($3950 × 8% × 5)
= $3950 + ($3950 ×8/100 × 5)
= $3950 + (3950 × 8 × 5/100)
= $3950 + (31600 × 5/100)
= $3950 + (158000/100)
= $3950 + $1580 = $5530
Thus, Amount (A) to be paid = $5530 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 $3950, the simple interest in 1 year
= 8/100 × 3950
= 8 × 3950/100
= 31600/100 = $316
Thus, simple interest for 1 year = $316
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $316 × 5 = $1580
Thus, Simple Interest (SI) = $1580
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1580
= $5530
Thus, Amount to be paid = $5530 Answer
Similar Questions
(1) Calculate the amount due if Mary borrowed a sum of $3050 at 6% simple interest for 4 years.
(2) What amount does John have to pay after 6 years if he takes a loan of $3200 at 9% simple interest?
(3) Nancy took a loan of $6300 at the rate of 8% simple interest per annum. If he paid an amount of $9324 to clear the loan, then find the time period of the loan.
(4) Elizabeth took a loan of $4900 at the rate of 9% simple interest per annum. If he paid an amount of $7546 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 10% simple interest.
(6) What amount does John have to pay after 5 years if he takes a loan of $3200 at 8% simple interest?
(7) How much loan did Michael borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5830 to clear it?
(8) In how much time a principal of $3200 will amount to $3520 at a simple interest of 2% per annum?
(9) Barbara took a loan of $5100 at the rate of 10% simple interest per annum. If he paid an amount of $9690 to clear the loan, then find the time period of the loan.
(10) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $7172 to clear the loan, then find the time period of the loan.