Question:
What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 8% simple interest?
Correct Answer
$5600
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 8% × 5
= $4000 ×8/100 × 5
= 4000 × 8 × 5/100
= 32000 × 5/100
= 160000/100
= $1600
Thus, Simple Interest = $1600
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 = $4000 + $1600
= $5600
Thus, Amount to be paid = $5600 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 = $4000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 5 years
Thus, Amount (A)
= $4000 + ($4000 × 8% × 5)
= $4000 + ($4000 ×8/100 × 5)
= $4000 + (4000 × 8 × 5/100)
= $4000 + (32000 × 5/100)
= $4000 + (160000/100)
= $4000 + $1600 = $5600
Thus, Amount (A) to be paid = $5600 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 $4000, the simple interest in 1 year
= 8/100 × 4000
= 8 × 4000/100
= 32000/100 = $320
Thus, simple interest for 1 year = $320
Therefore, simple interest for 5 years
= Simple interest for 1 year × 5
= $320 × 5 = $1600
Thus, Simple Interest (SI) = $1600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1600
= $5600
Thus, Amount to be paid = $5600 Answer
Similar Questions
(1) If Paul paid $5640 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(2) Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 4 years.
(3) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $10758 to clear the loan, then find the time period of the loan.
(4) How much loan did Kimberly borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8312.5 to clear it?
(5) Christopher had to pay $4480 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(6) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 2% simple interest?
(7) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 10% 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) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $7360 to clear the loan, then find the time period of the loan.
(10) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $12600 to clear the loan, then find the time period of the loan.