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) How much loan did Christopher borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6900 to clear it?
(2) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $10296 to clear the loan, then find the time period of the loan.
(3) If Jessica borrowed $3750 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(4) Calculate the amount due if Jessica borrowed a sum of $3750 at 8% simple interest for 3 years.
(5) If Kenneth paid $5800 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 9% simple interest.
(7) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $11000 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 6% simple interest for 3 years.
(9) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $10921 to clear the loan, then find the time period of the loan.
(10) How much loan did David borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6210 to clear it?