Question:
What amount does Karen have to pay after 6 years if he takes a loan of $3950 at 8% simple interest?
Correct Answer
$5846
Solution And Explanation
Solution
Given,
Principal (P) = $3950
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) = $3950 × 8% × 6
= $3950 ×8/100 × 6
= 3950 × 8 × 6/100
= 31600 × 6/100
= 189600/100
= $1896
Thus, Simple Interest = $1896
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 + $1896
= $5846
Thus, Amount to be paid = $5846 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) = 6 years
Thus, Amount (A)
= $3950 + ($3950 × 8% × 6)
= $3950 + ($3950 ×8/100 × 6)
= $3950 + (3950 × 8 × 6/100)
= $3950 + (31600 × 6/100)
= $3950 + (189600/100)
= $3950 + $1896 = $5846
Thus, Amount (A) to be paid = $5846 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 6 years
= Simple interest for 1 year × 6
= $316 × 6 = $1896
Thus, Simple Interest (SI) = $1896
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $3950 + $1896
= $5846
Thus, Amount to be paid = $5846 Answer
Similar Questions
(1) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $8670 to clear the loan, then find the time period of the loan.
(2) Thomas took a loan of $5600 at the rate of 9% simple interest per annum. If he paid an amount of $9632 to clear the loan, then find the time period of the loan.
(3) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9750 to clear it?
(4) How much loan did Donald borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7475 to clear it?
(5) How much loan did Betty borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6875 to clear it?
(6) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 5% simple interest?
(7) James took a loan of $4000 at the rate of 10% simple interest per annum. If he paid an amount of $7200 to clear the loan, then find the time period of the loan.
(8) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $9112 to clear the loan, then find the time period of the loan.
(9) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(10) Find the amount to be paid if Richard borrowed a sum of $5600 at 3% simple interest for 8 years.