Question:
What amount does William have to pay after 6 years if he takes a loan of $3500 at 8% simple interest?
Correct Answer
$5180
Solution And Explanation
Solution
Given,
Principal (P) = $3500
Rate of Simple Interest (SI) = 8%
Time (t) = 6 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) = $3500 × 8% × 6
= $3500 ×8/100 × 6
= 3500 × 8 × 6/100
= 28000 × 6/100
= 168000/100
= $1680
Thus, Simple Interest = $1680
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 = $3500 + $1680
= $5180
Thus, Amount to be paid = $5180 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 = $3500
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 6 years
Thus, Amount (A)
= $3500 + ($3500 × 8% × 6)
= $3500 + ($3500 ×8/100 × 6)
= $3500 + (3500 × 8 × 6/100)
= $3500 + (28000 × 6/100)
= $3500 + (168000/100)
= $3500 + $1680 = $5180
Thus, Amount (A) to be paid = $5180 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 $3500, the simple interest in 1 year
= 8/100 × 3500
= 8 × 3500/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 6 years
= Simple interest for 1 year × 6
= $280 × 6 = $1680
Thus, Simple Interest (SI) = $1680
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3500 + $1680
= $5180
Thus, Amount to be paid = $5180 Answer
Similar Questions
(1) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 9% simple interest.
(2) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 3% simple interest?
(3) Calculate the amount due if Patricia borrowed a sum of $3150 at 9% simple interest for 3 years.
(4) How much loan did Steven borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8250 to clear it?
(5) Calculate the amount due after 9 years if Jennifer borrowed a sum of $5250 at a rate of 5% simple interest.
(6) Jessica took a loan of $5500 at the rate of 10% simple interest per annum. If he paid an amount of $8800 to clear the loan, then find the time period of the loan.
(7) Jessica took a loan of $5500 at the rate of 8% simple interest per annum. If he paid an amount of $8140 to clear the loan, then find the time period of the loan.
(8) Donald took a loan of $7000 at the rate of 7% simple interest per annum. If he paid an amount of $10430 to clear the loan, then find the time period of the loan.
(9) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9028 to clear the loan, then find the time period of the loan.
(10) What amount will be due after 2 years if Daniel borrowed a sum of $3550 at a 8% simple interest?