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) In how much time a principal of $3200 will amount to $3840 at a simple interest of 4% per annum?
(2) Calculate the amount due if Robert borrowed a sum of $3100 at 6% simple interest for 3 years.
(3) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 10% simple interest?
(4) Calculate the amount due if Sarah borrowed a sum of $3850 at 3% simple interest for 4 years.
(5) Joseph had to pay $4144 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 4% simple interest.
(8) How much loan did Jacob borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $9200 to clear it?
(9) How much loan did Daniel borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6710 to clear it?
(10) Robert took a loan of $4200 at the rate of 9% simple interest per annum. If he paid an amount of $7980 to clear the loan, then find the time period of the loan.