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) Mark took a loan of $6800 at the rate of 8% simple interest per annum. If he paid an amount of $11696 to clear the loan, then find the time period of the loan.
(2) Patricia took a loan of $4300 at the rate of 6% simple interest per annum. If he paid an amount of $6106 to clear the loan, then find the time period of the loan.
(3) Richard took a loan of $5200 at the rate of 8% simple interest per annum. If he paid an amount of $8528 to clear the loan, then find the time period of the loan.
(4) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 2% simple interest for 8 years.
(5) Calculate the amount due if Thomas borrowed a sum of $3800 at 7% simple interest for 3 years.
(6) In how much time a principal of $3050 will amount to $3812.5 at a simple interest of 5% per annum?
(7) Find the amount to be paid if Christopher borrowed a sum of $6000 at 4% simple interest for 8 years.
(8) In how much time a principal of $3150 will amount to $3654 at a simple interest of 4% per annum?
(9) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $9514 to clear the loan, then find the time period of the loan.
(10) Calculate the amount due if Susan borrowed a sum of $3650 at 8% simple interest for 3 years.