Question:
Find the amount to be paid if David borrowed a sum of $5400 at 8% simple interest for 7 years.
Correct Answer
$8424
Solution And Explanation
Solution
Given,
Principal (P) = $5400
Rate of Simple Interest (SI) = 8%
Time (t) = 7 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) = $5400 × 8% × 7
= $5400 ×8/100 × 7
= 5400 × 8 × 7/100
= 43200 × 7/100
= 302400/100
= $3024
Thus, Simple Interest = $3024
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 = $5400 + $3024
= $8424
Thus, Amount to be paid = $8424 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 = $5400
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 7 years
Thus, Amount (A)
= $5400 + ($5400 × 8% × 7)
= $5400 + ($5400 ×8/100 × 7)
= $5400 + (5400 × 8 × 7/100)
= $5400 + (43200 × 7/100)
= $5400 + (302400/100)
= $5400 + $3024 = $8424
Thus, Amount (A) to be paid = $8424 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 $5400, the simple interest in 1 year
= 8/100 × 5400
= 8 × 5400/100
= 43200/100 = $432
Thus, simple interest for 1 year = $432
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $432 × 7 = $3024
Thus, Simple Interest (SI) = $3024
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5400 + $3024
= $8424
Thus, Amount to be paid = $8424 Answer
Similar Questions
(1) Linda took a loan of $4700 at the rate of 9% simple interest per annum. If he paid an amount of $8084 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due after 10 years if Patricia borrowed a sum of $5150 at a rate of 8% simple interest.
(3) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6660 to clear the loan, then find the time period of the loan.
(4) What amount will be due after 2 years if Kenneth borrowed a sum of $4000 at a 7% simple interest?
(5) If Jessica paid $4350 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 6% simple interest?
(7) How much loan did Robert borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5865 to clear it?
(8) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 2% simple interest?
(9) Jessica had to pay $4200 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(10) Find the amount to be paid if Jessica borrowed a sum of $5750 at 5% simple interest for 8 years.