Question:
What amount does Christopher have to pay after 6 years if he takes a loan of $4000 at 8% simple interest?
Correct Answer
$5920
Solution And Explanation
Solution
Given,
Principal (P) = $4000
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) = $4000 × 8% × 6
= $4000 ×8/100 × 6
= 4000 × 8 × 6/100
= 32000 × 6/100
= 192000/100
= $1920
Thus, Simple Interest = $1920
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 + $1920
= $5920
Thus, Amount to be paid = $5920 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) = 6 years
Thus, Amount (A)
= $4000 + ($4000 × 8% × 6)
= $4000 + ($4000 ×8/100 × 6)
= $4000 + (4000 × 8 × 6/100)
= $4000 + (32000 × 6/100)
= $4000 + (192000/100)
= $4000 + $1920 = $5920
Thus, Amount (A) to be paid = $5920 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 6 years
= Simple interest for 1 year × 6
= $320 × 6 = $1920
Thus, Simple Interest (SI) = $1920
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $4000 + $1920
= $5920
Thus, Amount to be paid = $5920 Answer
Similar Questions
(1) Michael had to pay $3696 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(2) Calculate the amount due after 10 years if Barbara borrowed a sum of $5550 at a rate of 3% simple interest.
(3) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 4% simple interest.
(4) Nancy had to pay $4772.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) David took a loan of $4800 at the rate of 6% simple interest per annum. If he paid an amount of $7392 to clear the loan, then find the time period of the loan.
(6) Robert had to pay $3565 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(7) Calculate the amount due if Sarah borrowed a sum of $3850 at 7% simple interest for 3 years.
(8) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 10% simple interest.
(9) What amount does William have to pay after 6 years if he takes a loan of $3500 at 6% simple interest?
(10) Calculate the amount due after 10 years if Mary borrowed a sum of $5050 at a rate of 9% simple interest.